Offshore support vessel owner and operator Vallianz Holdings has proposed to consolidate every 30 shares into one.
The firm has an issued share capital of $491.5 million consisting of about 16.6 billion shares as of yesterday. The proposed share consolidation will shrink the capital base to about 552 million shares.
The theoretical trading price of each consolidated share will be 30 cents, based on the counter's trading price of one cent on July 3.
The board believes that the proposed share consolidation will help to reduce short-term share price volatility, as well as fluctuations in its market cap, and offset the effects of short-term share price speculation.
"As share trading may involve certain minimum fixed expenses (such as minimum brokerage fees), trading in lowly priced shares may translate to higher transaction costs, relative to the trading price, for each board lot of shares," Vallianz said. "In addition, lowly priced shares may be more prone to speculation and market manipulation, and therefore are generally more volatile as compared to higher priced shares."
It hopes the proposed share consolidation may generate greater market interest, and raise the attractiveness of the firm and its shares.
"It is expected that, all other things being equal, the theoretical trading price and net tangible assets (NTA) of each consolidated share following the decrease in the number of shares in issue would be higher than the current trading price and NTA of each existing share."
Additional benefits of consolidation could include increased "market interest and activity in the shares from investors, including institutional investors, thus providing a more diverse shareholder base".
The proposed share consolidation is subject to shareholders' approval at its 2018 annual general meeting (AGM), as well as approval from the Singapore Exchange (SGX) for the listing and quotation of the consolidated shares.
Separately, Vallianz announced it has received notice from the SGX for the listing of 196.7 million settlement shares on the Catalist board, at an issue price of 1.6 cents apiece, to be issued to its trade creditors.
The price represents a 60 per cent premium above the counter's volume weighted average price of one cent on June 27, being the market day when the agreements were entered into.
The settlement shares represent about 1.19 per cent of the firm's issued share capital of 16.5 billion shares, and 1.18 per cent of the firm's enlarged share capital as of June 27.
Since the company's last AGM in July last year, Vallianz's issued share capital has increased from 4.5 billion shares to 16.5 billion shares as of June 27, in part due to the exercise of warrants, and a rights cum warrants issue.
The subscription of the settlement shares by the trade creditors will offset fully against aggregate trade payables of $3.1 million, Vallianz said.
It added that the trade creditors are trade vendors of the group, with the trade payables having been incurred in respect of purchases made in the ordinary course of business.