Dixon Advisory’s parent company, E&P Financial Group, has told shareholders the vote on its delisting from the ASX will be delayed by a week.
In September, just a week after the Senate approved a motion by Pauline Hanson’s One Nation paving the way for an inquiry into the Dixon Advisory debacle, E&P announced it would seek to delist from the ASX.
Although E&P did not specify the regulatory processes that contributed to its decision to leave the ASX, in a listing last month it said the benefits of being listed on the exchange are “largely outweighed” by the potential benefits of the next phase of growth in an unlisted environment.
The company’s shareholders were expected to make a decision on delisting on October 24, with the board saying it was fully supportive of the motion for several reasons, including a “persistently and noticeably” low share price, direct costs high associated with listing on the Stock Exchange. ASX, and having “no short or medium term requirements to raise capital”.
“Part of the rationale for the delisting is the low level of trading liquidity in EP1 shares, with an average of approximately 33,000 shares trading per day in the 12 months to September 2024.” , the company said in the quote.
However, in a subsequent announcement on the ASX last week, E&P postponed its extraordinary general meeting and voting until November 1, 2024, citing the need for further information from shareholders.
“Since the announcements noted above, the Company has received comments from shareholders requesting additional guidance regarding the proposed delisting and related transactions, including the buyout,” E&P said in the announcement.
“In addition, and despite its prior confirmation of non-objection to the NoM [notice of meeting]the ASX has considered imposing additional requirements on the Company regarding the interconditional nature of the proposed delisting and placement.
The firm also stressed that shareholders should read the additional information “in its entirety and in conjunction with the NoM”.
E&P said that due to the “current illiquidity” of the company’s shares, the delisting could potentially force some shareholders into an unlisted environment. To avoid this, the board would propose a buyout before the proposed delisting.
“Subject to EGM approval, the buyout will facilitate a liquidity opportunity for existing investors that would otherwise not be readily available,” it said.
“Taking into account the Company’s membership record and the Company’s ability to raise capital, the Company has assessed that a $25 million buyout represents the appropriate balance between the use of debt and equity shares and the provision of a widely accessible exit opportunity for Shareholders who do not wish to remain registered on the Company’s register in an unlisted environment or who wish to remain so but with a reduced participation.
However, the company does not currently have the “financial resources” available to facilitate a buyout of this magnitude.
“As a result, the company raised a combination of debt and equity to finance the buyout,” he added.
“In order to limit the dilutive impacts of a typical fundraising, the fundraising was structured as a conditional placement of notes conditional on the delisting and redemption resolutions proposed at the EGM, with the notes being mandatorily converted into ordinary shares. at a significant price. premium compared to recent transactions.
“Conditionality was included to mitigate shareholder dilution if the proposed delisting resolution was not approved by shareholders.”
