Share consolidations dont necessarily destroy shareholder value. I have seen some companies that have benefited grreatly from share consolidations. ANH was a 0.2c stock. They did a 10 to 1 share consoldation and immediately the stock wnet for a massive run and are now at 7c.
Its just that UCL currently have 1.2billion shares on issue (including options exercised). THey need to raise $1.6billion to build the plant. ALot of it will be debt funded but some of it will be equity.
THey could very easily end up having many billion shares on issue. COmpanies which have billions of shares on issue (excluding the blue chips) are looked at quite negatively by the market. An excellent example is MUL who are definitely going for the world record.
I just dont want UCL to have billions of shares on issue. I hope that they can find another way to raise equity besides doing it on the ASX. Hopefully a listing on the Dubai exchange possibly will be a much easier and cheaper way of raising equity. I would rather debt be used as a first option though. The ASX has destroyed the sharehlder value of UCL. If the market didnt have such negative sentiments towards Iran over here, UCL would have been able to raise equity at much higher share prices over recent years; hence a much less dilutional effect.
ANyway I dont think a share consolidation is something that would be high on the agenda of the UCL board for the time being but I believe it will be something that UCL may need to consider in the long run IMO.
Cheers
UCL Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
