consolidation, page-3

I have posted several times over the last 12 months that a Share Consolidation for ABU would be coming sooner rather than later.

Big investors are more likely to invest in a company whose sp is 30c, rather than 2.0c!


Some Reasons for a Consolidation:

1. If ABU is now planning to raise further capital for some new plan, which may be a much larger processing plant, then this funding will be easier to obtain with its sp being higher, and less shares on issue.

2. At very low prices and high volumes, traders may be able to manipulate the sp for their own benefit.

3. "A Share Consolidation will make investing in a company's shares more attractive to a broader range of institutional and professional investors and other members of the investing public. Many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced shares, or which tend to discourage individual brokers from recommending low-priced shares to their customers.

4. Some of these policies and practices may also function to make the processing of trades in low-priced shares economically unattractive to brokers. Moreover, because brokers’ commissions on low-priced shares generally represent a higher percentage of the share’s price than commissions on higher-priced shares, a low average price per share can result in individual shareholders paying higher transaction costs."


ABU's reasons for the Share Consolidation as stated on their "Notice of General Meeting"

(a) that the Company has a greater number of Shares on issue than many comparable companies, meaning that its Share price is lower for reasons other than valuation;

(b) negative perceptions associated with a low Share price versus the overall value;

(c) negative perceptions for potential international investors that generally deal in markets where companies generally have far fewer shares on issue; and

(d) administrative inconvenience.