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nzdude

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16/09/16

17:32

Post #: 19214774
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Originally posted by pintohoo ↑

Hi all,

Due to timing - Trump/Clinton election and Alexium hitting straps on receipts as we have been many times informed - I was having a discussion this morning on ADR's - on one particular issue with them.

This all stems from conversations about ??? 5 or 6 months ago when it was talked about that if AJX listed in the states soon (6 months back) then, they would more than likely need to raise some capital to pay for the listing costs - but, if it were some time down the track ?? a few months I think from memory (ref. the posts way back) - then, quite possibly AJX would not raise any cash at all - just list.

Now - we are in that timing territory - and without bringing in the complication of the Presidential election - the question that came up about ADR's seems worthy of some air.

Below is a link about how ADR's work - whether or not they are Level 3 is irrelevant.

http://www.investinganswers.com/fin...ck-market/american-depositary-receipt-adr-843

What is relevant is that the 'custodial bank' - may well need to have???

I don't know what you call it - but, I will call it a 'float' - or a 'kitty' - meaning a float like you have at a school fete - or a float you have in the till in a shop -

but, in this case - the float would be Alexium shares -

What I mean is this ----- ok - say I am the custodial bank -

and, the bell rings - and off we go trading our ADR's on the US board.

So - someone comes in and wants to buy 10,000 ADR's (lets use an example of say 20 shares per ADR) --

so - I (the custodial bank) - would need to own 200,000 Alexium shares - so, I could provide those ADR's.

Now - I assume that the custodial bank doesn't have zero float - why?

Because if they got an order in for say 300,000 ADR's - that would mean that they would have to supply 6 Million AJX shares (300,000 X 20)

So - if they had no float - they would have a hell of a job getting 6 million shares in a hurry --------- at least IMO they would.

So - I assume they would want an amount of stock to start business.

Does anyone know if I am on the right track - and, if I am - what sort of float size might a custodial bank have ------------ and, how long before trading would they be likely to start building that float?

I hope the above makes sense.

All in my opinion.

tia

Pinto

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What would they do with the money? Is it likely they would they use it to buy back shares in Australia to avoid dilution?

AJX Price at posting: 54.0¢ Sentiment: Buy Disclosure: Held
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