from iii2 Dec 2012 13:35
In September 2011 Tricor was classified as an "Investing Company" under AIM Rule 15.An Investing Company is a shell company without significant viable ongoing business activities and as such is not allowed to remain listed on AIM unless it acquires an activity that is acceptable to AIM regulators within 12 Months of that date.This business is normally acquired by reverse takeover but it can raise and use the funds for acquiring an appropriate business.Tricor failed to implement this process within 12 Months and was suspended.Under AIM Rule 15 it now has a further 6 Months,until end March 2013, to implement this investing process,if it implements the process to the satisfaction of AIM regulators within this period its listing will be restored.If not its AIM listing will be cancelled.Hence the reason for present suspension.
The capital reconstruction is another matter.Put simply Tricor has an absurdly large number of shares in issue(nearly 8 billion),more than some FTSE100 companies,the company has negative assets and each share has a negligable value that has no relation to a normally used currency unit.The purpose of the share consolidation is to reduce the number of shares to a more appropriate number,and it was proposed that they should be reduced by a factor of 1000 to 7.7million by consolidating 1000 OLD Shares into ONE NEW share .
This makes no difference to the value of an individual holders investment as shareholders own the company the fact that the shares are reduced in number makes no difference to each shareholders proportion of the company they own.You would have 1000th of the shares you had previously but each share would be worth 1000 times more when divided into the market value of the company.
For technical accounting reasons when you consolidate shares you also consolidate the par or issued nominal value value of the shares by the same factor.The issued or par value has nothing to do with market price and is related to the total paid up capital of the company.Because the resultant paid up value would exceed the likely market value of the shares and future new shares cannot be issued at below paid up value the shares have to be split into two categories New Ordinary & Deferred.Only the 7.7m New Ordinary of £0.0001 par value will be listed,the 7.7m Deferred shares of £0.0999 will have no rights and value.
There is some doubt as to whether this capital consolidation will take place.I doubt however if FSA & listing authorities will allow the issue of billions of new shares of negligible value to carry out its investing policy and for the company to remain listed that would result if not carried out.The issue of billions of negligible value shares can lead to market abuse even when it was not the intentions of the company to commit market abuse.
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