Buyback route Sometimes, according to Morell, companies offer to...

Buyback route
Sometimes, according to Morell, companies offer to buy back shares from public shareholders prior to delisting in order to get around these problems. We have not seen any examples of buybacks in the delisted companies we have analysed year-to-date.
Iowa-based Powerfilm, for example, has created a list of shareholders that are on its register or those which have contacted the company and has been passing that on to others interested in buying some of the stock in the business.
Founder and chief executive Frank Jeffrey says only one transaction has been matched so far and it has been difficult to identify investors that own shares through the nominee accounts typically offered through retail stockbrokers. Progress has been made more recently through an agreement with Computershare, Jeffrey adds.
As for the future, Jeffrey says conditions in the thin film solar industry are difficult and as a result the business is planning to focus more on system engineering where it would face less competition from low cost Chinese suppliers.
There are no current plans to distribute any of Powerfilm’s significant balance sheet firepower to shareholders, Jeffrey says. As well as $12.4 million (£8 million) of current assets less total liabilities, the business has significant excess manufacturing capacity, should markets recover.
Powerfilm is likely to persevere with its shift into systems engineering in the short term, according to Jeffrey. A merger with a business operating in the systems area would also be considered if a partner could be found to maximise the company’s existing capabilities. A cash bid is not on the horizon, he adds, though the company would listen if a bid was forthcoming.
Another option for delisting companies is to offer a ‘matched bargain facility’, an option pursued by bus manufacturer Optare. This is a service offered by registrar Capita – or other providers – that allows investors to trade unlisted stock.
These facilities are typically used by employees who are looking to sell off stock they have been given as part of share or option awards from the company, says Capita’s chief development officer Michael Kempe.
Share consolidations are another way companies seek to shrink their shareholder registers after a delisting, according to Morell at Brabners.
Difficult situation
Overall, it seems like the odds are stacked against retail investors when companies delist even if there is value left within the business. Share prices tend to plummet at the point when a company announces its intention to delist. Investors all rush for the exit to claw back any money before liquidity disappears.
Deciding to sell shares in these circumstances is a tough one to make but might ultimately be the difference between salvaging some value from an investment that has not worked out and receiving nothing at all.