Ann: Results of Meeting-MPJ.AX, page-20

I thought this was a well written account of why consolidation may be undertaken and how it works for anyone uncertain about the process and implications (as I was). Albeit regarding another company - it is explained in a very straight forward manner. I have included the link to the full text but also pasted in the sections that I felt most relevant - company name removed.

***note this is just an example, not MPJ specific***

http://www.ozminerals.com/media/news/capital-return-and-share-consolidation/

Why are you doing the consolidation?
# has a very large number of shares on issue due to historical equity-based capital raisings and corporate transactions. The number of shares is disproportionate to #s’ peers, so the Company proposes to reduce this number by way of this share consolidation.

What will the effect of the consolidation be?
As the consolidation applies equally to all of the Company’s shareholders, individual shareholdings will be reduced in the same ratio as the total number of the Company’s shares (subject only to the rounding of fractions). It follows that the consolidation will have no effect on the percentage interest of each individual shareholder in the Company, except for rounding up.

Here is an example:
If a shareholder currently has 3,240,000 shares representing approximately 0.1 percent of the Company’s issued capital, then after the share consolidation is implemented, the shareholder will have 324,000 shares following the consolidation, still representing the same 0.1 percent of the Company’s issued capital.

What will happen to the share price?
While the share consolidation will have no effect on the underlying value of the Company, the effect on # share price at the time of the conversion should be to trade at ten times the price at which it previously traded. The share price will continue to be influenced by other factors.