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FAR 12.5¢

Should we Consolidate?

  1. dodds

    882 Posts.
    I know the subject has been touched on from time to time and is certainly not as interesting as talking about amount of oil, commerciality, drilling wells etc., but constantly I am thinking whether it remains in our best interest to continue with the huge number of shares out there (some 3.2 billion). At the end of the day we want the share price to increase as high as possible as quick as possible. (Don't misconstrue here, this is not based on let's consolidate as that will give us an immediate share price increase!). My concern is what are the negatives in having so many shares...and what positives (or negatives) could be expected from consolidating?

    My understanding is (recognising there will be many others here far more knowledgeable than me on this)....

    .....short term traders love low priced stocks (consolidation could reduce the number of short term traders giving us better stability?)
    .....institutions dislike low priced stocks (they generally refrain from buying)
    .....institutions like higher priced stocks (consolidation would give us a higher base price and could entice instos which would then have a natural flow on to the share price?)
    .....I cringe at the thought there will be another CR where we might add yet another 300-400 million shares...with activity to take place over the next 12-18 months we could have in excess of 4 billion shares!

    I accept the argument that a company's value is its market capital, not its share price, also that eventually that value will be reflected in the share price, irrespective of the number of shares.

    As I mentioned above there will be others within our group here that will know far more about the positives and negatives of consolidation than me. I would love to revisit the thoughts and arguments for a consolidation (I wonder what Farjoy would prefer?). Perhaps if there was a clear view we could even promote that view to CN.

    From my perspective I would like to see a five to one consolidation (taking us to around 640 million shares).

    All just my thoughts


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