Forum Archive Index - March 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

>
>Two questions seems to stand out to me...
> 
>Why consolidate the shares, halving the number on issue, while at
> the same time asking to be allowed to increase the number of shares
> by 50%?
>

Share markets tend to have  psychological range as to where a share 
price for a company operating in a certain sector or of a certain 
size 'should' be.  There is no real rational reason for this.   
Whether you measure your share of the pie in 35c shares or 70c shares 
makes no difference.   If the share capital is restructured so that 
whereas 'before' you had 10,000 35c shares and 'after' you have 5,000 
70c shares, you are no better or worse off.   Maybe Brierley think 
that when a share trades on its home market at less that 
30c(Singapore) it is percieved as a penny dreadful and potential 
investors are frightened away.   It shouldn't matter, but sometimes 
it does.

The 50% increase in shares that got approved *can* be issued as 
options over 10 years for the benefits of employees and directors, 
leaving all other shareholders out.  Allegedly this will give an 
incentive for the said employees and directors to preform better.  

>
>And if they want the share price to double, why don't they
> manage the company properly to get the price closer to NTA?
> 

Exactly!   As it stands all they have to do is break the company up 
to achieve this.  

But why would you do that if you are already on an 'above market' 
salary package *and* have just been granted the ability to issue 
yourself shares at a 50% discounted price  to the asset backing?
That way you can dilute the asset base of the existing shareholders 
and get more of the final wind up value for yourself! SNOOPY

  
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