Dixon Advisory parent company E&P Financial Group has told shareholders that the vote on its delisting from the ASX would be delayed a week.
In September, just a week after the Senate approved a motion moved 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 didn’t elaborate on the regulatory proceedings that have contributed to its decision to exit the ASX, in a listing last month it said the benefits of being listed on the stock exchange are “materially outweighed” by the potential benefits of delivering the next phase of growth in an unlisted environment.
The firm’s shareholders were expected to make a decision on the delisting on 24 October, with the board said to be entirely behind the motion for several reasons, including a “consistently and materially” low trading price, hefty direct costs associated with being listed on the ASX, and having “no near or medium-term requirement to raise capital”.
“Part of the rationale for pursuing the delisting is the low level of trading liquidity in EP1 shares, with trading averaging approximately 33,000 shares per day in the 12 months to September 2024,” the firm said in the listing.
However, in a subsequent announcement on the ASX last week, E&P postponed its extraordinary general meeting and the vote until 1 November 2024, citing shareholder need for further information.
“Since making the announcements noted above, the Company has received shareholder feedback seeking further guidance in relation to the Proposed Delisting and associated transactions, including the Buy-Back,” E&P said in the announcement.
“Additionally, and notwithstanding its prior confirmation of no objection to the NoM [notice of meeting], ASX has considered the imposition of further requirements on the Company relating to the inter-conditional nature of the Proposed Delisting and the Placement.”
The firm also stressed that shareholders should read the additional information “in its entirety and in conjunction with the NoM”.
E&P detailed that, due to the “current illiquidity” of the firm’s shares, the delisting would potentially force some shareholders into an unlisted environment. To avoid this, the board would provide a buy-back ahead of the proposed delisting.
“Subject to approval at the EGM, the Buy-Back will facilitate a liquidity opportunity for existing investors which may not otherwise be readily available,” it said.
“Having regard to the Company’s register of members and the ability for the Company to raise capital, the Company assessed that a buy-back of $25 million represents the appropriate balance between utilisation of debt and equity capital and provision of a broadly accessible exit opportunity for those Shareholders who do not want to remain on the Company’s register in an unlisted environment or who want to remain but with a reduced holding.”
However, the company does not currently have the “financial resources” available to facilitate a buy-back of this size.
“Accordingly, the company raised a combination of debt and equity capital to fund the Buy-Back,” it added.
“In order to limit the dilutive impacts of a typical equity raising, the equity raising was structured as a conditional placement of notes conditional upon the proposed delisting and buy-back resolutions at the EGM, with the notes mandatorily converting to ordinary shares at a significant premium to recent trading.
“The conditionality was included to mitigate shareholder dilution should the proposed delisting resolution not be approved by shareholders.”
