The arrangement goes like this.1. someone out there (let’s call...

The arrangement goes like this.

1. someone out there (let’s call them Firm X) thinks STO is overvalued and wants to short them
2. Firm X approaches UBS to create the financial arrangement.
3. UBS approaches large holders of STO stock who they think would be open to loan their shares. Some funds have rules that prohibit such activity. ENN is not one of those holders.
4. UBS offers to borrow the ENN shares (here up to 100m) for a ‘rental fee’, which would be at a premium to the dividend yield. (STO disclosed part of the arrangement on Friday night.)
5. UBS now has ‘title’ to the shares on behalf of firm X who instructs UBS to sell/auction up to 100m into the market.
6. Firm X is mighty confident they can buy these shares at a later date and well below the A$ 6.75 price that 61.4m shares were sold at on Thursday night.
7. UBS is still looking for a buyer of 38.6m shares.

Classic predatory short seller behaviour by a professional player. Firm X remains a mystery. Firm X is also sitting on a loss of A$ 12.9m!!