Not sure whether this is the best thread to post on but since it includes comments on the listing it seems appropriate.
Because I have had some difficulty reconciling the little I knew about ADRs and the IPO process with some of Nicks comments, I decided to do some hunting thanks to Google. I know Pinto has also been expressing a number challenges in reconciling information. Below are my thoughts. If anyone can make more sense of it all than me feel free.
Berry Amendment and implications
- I can’t see anything that suggests that the Berry amendment means the company supplying the Department of Defense has to be US owned. To quote from the Department’s “Berry Amendment FAQ” http://www.acq.osd.mil/dpap/cpic/ic/berry_amendment_faq.html
As of November 16, 2006, the law restricts any funding appropriated or otherwise available to DoD from being used to buy the following end items, components, or materials unless they are wholly of US origin: An article or item of food; clothing; tents, tarpaulins, or covers; cotton and other natural fiber products; woven silk or woven silk blends; spun silk yarn for cartridge cloth; synthetic fabric or coated synthetic fabric (including all textile fibers and yarns that are for use in such fabrics); canvas products, or wool (whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles); or any item of individual equipment (Federal Supply Class 8465) manufactured from or containing such fibers, yarns, fabrics, or materials; and hand or measuring tools.
And
The Berry Amendment has very few exceptions for textiles and related restrictions. For the most part, if you are purchasing textiles clothing, fabrics, fibers and yarns, tents, tarpaulins, or covers, or items of individual equipment (FSC 8465) manufactured from or containing covered fibers, yarns, fabrics, or materials, all processing/manufacturing must be done in the US and all of the material must be domestically sourced.
- There is a lot more detail including references to rules, regulations and the originating Acts. However in none of these can I find a reference to US owned companies being the critical decision making criteria. All these links are contained in the FAQ page.
3. There are exceptions to purchase but in essence they relate to non- availability of domestic products.
- The Buy America Act also applies and includes similar provisions. It does not appear to reference American owned companies.
- As a result I’d conclude the following
a. the listing is not so relevant since it doesn’t matter whether Alexium is wholly owned, partly owned or listed in the US. That may reconcile for me a problem I have had with ADRs and whether that makes Alexium a US owned company. Everything I have read says ADRs are an instrument for foreign owned companies.
b. As long as Alexium continues to do all processing/manufacturing in the US and all of the material is domestically sourced it will qualify
c. If the competitor were able to meet the same conditions the choice would be real and maybe more on properties of the fabrics and performance of the fire retardant element. Who knows maybe the extension also gives them time to consider their practices.
Listing protocols
Redbar posted some time ago on the rules but this is how I see it:
- The NYSE really has two relevant markets: NYSE and NYSE MKTS
- Each has their own listing rules. The latter appears to have been created with small to medium cap companies in mind as its financial rules are less stringent than the full NYSE.
- https://www.nyse.com/publicdocs/nyse/listing/NYSE _Initial_Listing_Standards_Summary.pdf will give you the standards. Maybe someone can make sense of whether Alexium meets any of these standards but it also seems there is some discretion possible. I haven’t been able to fathom this aspect and leave it to wiser minds
- The former requires an IPO price of $4 minimum and the latter has $3 and $2 prices.
- The $1 figure for NYSE that others have referred to is the average price that needs to be maintained over 30 days to remain listed on the NYSE. Though typically there is 6 months allowed to bring a company back to standard to retain the listing.
- The best summary (written – not pinto’s pictures) I have seen of the IPO process is in a document issued by KPMG. https://www.nyse.com/markets/nyse. It also includes the standards
ADRs
- A level 3 ADR program means that a foreign company is taking steps to permit shares from its home market to be deposited into an ADR program and traded in the US and is raising capital.
- There is not necessarily a one to one relationship between the price of the ADR and the shares of foreign stock. They may be fractions or multiples. I’ve surmised from this that whatever the initial price on the NYSE – whichever market it ends up on – that does not automatically mean the price will be the same for Australian shares. The Aussie shares may end up being a fraction of the ADR unless someone decides we might get a happy listing day present.
I have tried to make sense of all of the different things I’ve heard and read, including comments from Nick (for which I have been present) and only ended up more confused. I can’t reconcile the listing requirements, the pricing across markets and the implications for moving all or part of any holding across to the US. It did occur to me however that there is some advantage FOR Alexium, if it wishes to focus on the US market, if we move across and then sell as it releases more shares to the US market. Mmm. If there’s a nice premium that might make sense.
My conclusion in the end is that unless you really understand these processes it’s better to wait until more work has been done. Only then can we decide whether we will be happy little bunnies or grumpy, or still confused. I guess we have to work on the basis that the founding fathers and key Execs are Australian shareholders and as Craig Smith-Gander said, will have no interest in dudding themselves.
- see, I told you Adelaide brought them out of the woodwork
(20min delay)