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I’m open to comment and correction form anyone wishing to add to the following.
As stated in my post of 16th March, the main reason I wanted Tremor to Main list on the Nasdaq and delist from AIM, rather than this Foreign secondary listing route they are taking is, Tremor’s share price on the secondary listing, will likely just track the sp on the AIM and so, I cannot see the same peer value being attributed to Tremor from this move. See below…
Extract from the link previously posted…..The price of ADRs in the secondary market are, of course, determined by supply and demand, but the price will not deviate too much from the price of the underlying stock. If the ADR is trading at a higher price than the equivalent foreign shares of the company, then more shares of the company will be bought and held in the custodian bank, and more ADRs will be created. If the ADR trades below the equivalent price, then some ADRs will be cancelled, and the corresponding shares of the company will be released by the custodian bank. This maintains parity between the price of the ADR and the foreign shares, after accounting for the currency exchange rate. But. I am not without hope that Tremor will eventually move its main listing onto the Nasdaq Global, in the future. See below…
Extract from within the link previously posted…Level 2 and Level 3 sponsored ADRs must register with the SEC, and financial statements must be reconciled to GAAP. A Level 2 ADR requires partial compliance with GAAP, while a Level 3 ADR requires complete compliance. A Level 3 sponsorship is required, if the ADR is a primary offering, (a ‘primary offering’ is also known as an "initial public offering") and is used to raise capital for the company. Only Level 2 and Level 3 sponsored ADRs can be listed on the New York Stock Exchange, the American Stock Exchange, or NASDAQ.
If Tremor’s ADR is a Level 3 then this compliance level, as I read it, is the same as that required for a full listing on the Nasdaq Global index. And so, from the link below, it seems to me that once established with a secondary Foreign listing on the Nasdaq, Tremor could, at some point, delist from AIM and migrate their Main listing onto the Nasdaq Global index, as and when Tremor decides to do so. They could of course, maintain a ‘secondary’ on the AIM if they wish.
Therefore, this secondary foreign listing by Tremor could well be a gateway to its eventual migration onto the Nasdaq Global.
https://www.securitieslawyer101.com/2013/nasdaq-listings-101/
Nearly all you need to know about creating the IPO and the role of the Investment Bank/Underwriter.
https://thismatter.com/money/stocks/american-depositary-receipts.htm#:~:text=A%20Level%202%20ADR%20requires%20partial%20compliance%20with,Stock%20Exchange,%20the%20American%20Stock%20Exchange,%20or%20NASDAQ.
https://thismatter.com/money/stocks/selling-new-securities.htm
bald_eagle....re, Selling treasury shares....
Just to confirm...Extract...Shares held in treasury can be sold or transferred at any time. Consideration must be received by the company for shares sold or transferred unless the transfer is in connection with an employee share scheme.
bald_eagle...There may not be any limit. I will look into it.
ADR "levels" and how they differ for foreign listings.
ADRs can be "sponsored" or "unsponsored." Sponsored ADRs are those for which the foreign company has negotiated directly with the U.S. depositary bank.
Note…. A Level 3 ADR represent an initial public offering (IPO) on U.S. exchanges. An "IPO" is when a company's stock first becomes available to be purchased on a major U.S. stock exchange. The ADR is required to file a Form F-1 with the SEC. Tremor has submitted a draft Registration Statement on Form F-1.
There are several different "levels" of SEC scrutiny for ADRs. Level 1 ADRs trade over the counter (not on American exchanges) and are the only level of ADR that can be unsponsored. Level 1 ADRs have minimal SEC reporting requirements, and they're not required to file quarterly or annual reports in compliance with U.S. generally accepted accounting principles (GAAP), which means less information is available on these securities, and it's more difficult to compare their financial metrics to those of U.S. companies that comply with GAAP.
The lower amount of reliable information makes level 1 ADRs riskier for investors. Level 2 and level 3 ADRs, meanwhile, require the issuer to register and file annual reports with the SEC. Level 3 ADRs have stricter reporting requirements than level 2 ADRs. Level 3 ADRs represent an initial public offering (IPO) on U.S. exchanges. An "IPO" is when a company's stock first becomes available to be purchased on major U.S. stock exchanges. Level 3 ADRs therefore have the added ability to raise capital through a public offering on U.S. exchanges. In order to register the public offering, the ADR is required to file a Form F-1 with the SEC, which entails additional transparency and regulation. For more information, read this page on the SEC website.
I think it probable that Tremor will issue a tranche of new shares that will then be bought by their chosen US investment bank for conversion into ADS's. Anyway, isn't there a limit (5% or so) to the amount of treasury shares that can be sold in any one financial year?
gdog, re your ..."It appears we're talking about two different things. I am talking about getting off the AIM and listing on the Nasdaq, or any exchange with a decent reputation. I am not so sure that we'd need to do an IPO to achieve this as you so absolutely stated we would".
Well, unless you, or someone else, can come up with the alternative, then I will stick with my ‘absolute’. There may well be some other mildly obscure ways of listing on the main US exchanges, like the one 1gw has highlighted in relation to SLN, but I doubt that it is the norm. And, it is worth noting that SLN’s listing, done in the way that it was, didn’t result in a raised sp because it left the stock with one, or both important ingredients missing ….liquidity and demand for the stock. I think Tremor’s IPO success will depend on both of these drivers being present in equal measure, so I hope they can get it right.
As for getting off the AIM. If you look back to my post of the 16th March, headed, 'Tremor will never realise its full valuation on the AIM'...you will see just how much I also wanted Tremor to move their main listing onto the Nasdaq and exit the AIM, rather than the route they have now taken. We are where we are. We can but hope that all of us get some benefit from Tremor’s decision to do this secondary US listing instead. Liquidity and demand is key to that, in my view.
GSmiley....From what I have digested so far, the Underwriters normally seek a % of contingency over and above the agreed size of the issue, to help in the event that the issue is oversubscribed.
I think a big effort will be made by the Underwriters and Stifel to drum up institutional interest prior to this IPO.
As I understand it, the two sp’s will track each other either side of the pond, adjusted for dollar exchange etc, but the IPO price may be set lower, to get it off the ground.
Tricky...I think Tremor will issue a Prospectus at some point prior to the IPO. That should provide shareholders with much of the information that is currently missing, including the size of the issue, the IPO date and the price. I think it likely that there will be a favourable marketing plan/program and push for Tremor in the US, before this goes to market, and possibly a good set of results to help it along the way.
gdog....re your...I've read the link you provided. Where does it say a public foreign company must do an IPO to list in the USA exchanges?
That is as I read it. It is implied within the content of the article. I can find nothing to inform me to the contrary. As I said when I first opened this topic, I am happy to be corrected.
In reversion to Tremor’s proposal, the RNS states that Tremor intends to issue quote, ‘an initial public offering (the "Proposed Offering") of American Depositary Shares ("ADSs") representing its ordinary shares in the United States’. Since an ADS is an actual U.S. dollar-denominated equity share of a foreign-based company and each ADS is an actual share available for trading on an American stock exchange, how else can an ADS be created for trading, other than via an IPO?
Tricky...The ADS's are deposited in the custody of a US investment bank, refer to my previous post headed.... The standard IPO process and the sequences followed...,
gdog....https://www.ipohub.org/foreign-listings-on-u-s-exchanges/
All foreign public company listings on US exchanges are done via IPO's.
The sequences followed in a standard IPO process . Worth reading....
https://corporatefinanceinstitute.com/resources/knowledge/finance/ipo-process/
Apologies, the links didn't transfer with my last post, refer to links below ...
https://www.investopedia.com/terms/a/ads.asp
https://www.securitieslawyer101.com/2019/form-f-1-registration-statement-requirements-filling-effectiveness-going-public/
Some info on ADS’s and the F1 registration processes. There is more if you google it…
American Depositary Share (ADS) Definition (investopedia.com)
Form F-1 Registration Statements - Going Public Attorneys (securitieslawyer101.com)
A repost, for clarity...
ADS's are a popular form of dual listing for many leading non-U.S. companies is through American Depositary Receipts (ADRs). An ADR represents the foreign shares of the company held in trust by a custodian bank in the company’s home country and carries the same rights of the shares. Note that the stock price of a dual-listed company should be approximately the same in both jurisdictions, after taking currency differences and transaction costs into account. Otherwise, arbitrageurs would step in and exploit the price differences. That said, price divergences do occur from time to time, especially when trading hours do not overlap and there has been a significant price move in one market. Dual Listing Pros and Cons There are numerous advantages of dual listing. Companies get access to a larger pool of potential investors, which can be beneficial for investors as well. For example, many Australian and Canadian resource companies list their shares on European exchanges because of substantial investor interest, partly due to the relative paucity of local resource companies. Dual listing improves a company’s share liquidity and its public profile because the shares trade on more than one market. Dual listing also enables a company to diversify its capital-raising activities, rather than being reliant only on its domestic market.
As things stand, there are too many blanks. Best to wait for more guidance rather than speculating any further. The RNS stated quote…”The Proposed Offering is expected to take place in the second quarter of 2021 after the SEC completes its review process”. Effectively, this is saying that Tremor International expect to be offering these ADS's at some point between now and mid June. So highly likely that more information, and possibly a Prospectus, will be issued for shareholders as and when the Registration application clears the SEC.
An ADR is not the same as an ADS.
https://www.investopedia.com/terms/a/ads.asp
Tremor have 21/22 million shares in Treasury that can now be used for this IPO at a premium and any additional fund raising over there is just fine by me.
This post is courtesy of 1gw, advfm....
Buybacks vs IPO. As far as I can see, in the buybacks the company has bought: 14.6m shares at average price of around 133p in 2019 5.3m shares at average price of around 148p in 2020 0.9m shares at average price of around 520p in 2021 (togglebrush numbers) That totals around 20.8m shares at average price of 154p. If they can now obtain a Nasdaq listing, bring in US investors and in the process raise further capital at even £6, that strikes me as a pretty good round trip for the 21m shares. If they can get the marketing right they might have the chance of issuing a lot more shares at a significantly higher price, which again would seem to me to be good news for existing shareholders. I don't think many of us would complain about dilution if the capital is raised at an appropriate price. And for the company, raising capital on top of the existing cash balance would give it a lot of business optionality. Ultimately it might make it more attractive as an acquisition target, but it could also position the company to make acquisitions of its own to build value further before any ultimate sale of the company.
gdog…..the following is my view, based on what I have read….
There are two types of US listings, a Main (or Primary) and a Secondary. Tremor’s main listing is on AIM. If Tremor decides to keep their main listing on the AIM then they can only do a Secondary listing in the US. With this arrangement Tremor’s share price on the Secondary listing (US) will simply track the share price on the Main listing, the AIM. So, as I see it, with this type of arrangement we are unlikely to get any benefit from a Secondary listing on the Nasdaq.
To reap the benefits of the added valuations that the US market gives to adtec stocks, Tremor would need to move its Main listing onto the Nasdaq. If Tremor also want to keep a presence on the UK AIM exchange as well, then that would have to be in the form of Secondary type listing here.
Done this way, the Secondary listing share price on AIM will now track the Main US listing on the Nasdaq and we will get the benefit of that enhanced value. Obviously, this would involve delisting our current Main listing from the AIM to accommodate the reversal from the current situation.
Getting a Main listing on the Nasdaq could be achieved via a couple of different routes. First, and probably the easiest, Tremor, takes over, merges with or backs itself into a company that is already listed on the Nasdaq. The second route would require Tremor to create separate legal entities in each jurisdiction and then list separately in each of those jurisdictions, (US and UK), effectively becoming one company with two legal entities. This is common for dual listings, however, as I understand it, this would involve an IPO in America and the listing requirements would still need to be in the form of a Main and a Secondary.
In my view, Tremor’s sp will not benefit from the enhanced valuations that the US markets place on their stock, without moving our Main listing to the US.
Further, it would appear, that maintaining an AIM and a Nasdaq listing, is costly. A singular US listing would probably make more sense. Most trading platforms trade US stocks now anyway. A Secondary AIM listing would however, take care of the indirect exchange rate issues and the US withholding requirements for tax, and tax declarations, ie W8-BEN form filling, etc.
All-in-all, it is difficult to determine just how serious Tremor really is about a Main listing in the US and, it is my view that, if Tremor isn’t going to make a Main move onto the Nasdaq then, setting to one side the possibility of a buy-out, it is just not worth getting excited about a Secondary listing on the Nasdaq.