Consolidation rarely benefits shareholders when it’s happening solely as a last resort due to compliance issues i.e. when a listed company fails to maintain minimum closing bid prices. For example, the Nasdaq: where if the closing stock price is less than $1 for 30 consecutive days, the company is issued with a notice and it then has 180 days to get it closing above $1 again (for 10 trading days straight). If after 180 days the company still cannot maintain 10 days closing above $1 then Nasdaq may issue a delisting notice (or, as with most cases, it gives a further 180 day extension which is when most companies then resort to a consolidation, commonly called a “reverse split” - although the company might opt to do this earlier in the first 180 period too). This exercise brings the bid price well up and the company becomes compliant again with Nasdaq listing rules. In such situations, the consolidation occurred as a last resort measure to avoid delisting.
That is not the case here. So the arguments that have been cut-and-pasted above to drive some sort of fear of consolidation are therefore irrelevant and irrational.
As pointed out by other posters/in other posts, the proposed consolidation of MYX will:
distance us from the penny stock stigma, regardless of the fact we are Aus-listed at present (US investors still look at us through the same lens);
open us up to US/global institutional investors & funds that are often not permitted by their own investment rules to hold stocks in sub-$1 companies (due to the stigma of compliance risk);
make a dual listing easier and more attractive, without having to create ADRs (American Depositary Receipts, which are essentially a bundle of Aus shares traded as a single unit via a secondary US listing);
(arguably) lift the status of the stock (a $5.50 stock looks better than a 27.5c stock);
make M&A activity much easier as the size of the free float is reduced;
enable the company to do a future buy-back of small or unmarketable parcels; and
reduce administrative overhead and share register costs considerably.
Enough of the scare tactics nonsense aye.
MYX Price at posting:
27.5¢ Sentiment: None Disclosure: Held
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