Canada: LNG Energy Announces Share Alteration
LNG Energy Ltd announced a proposed consolidation and subsequent share split of its common shares in order to eliminate the number of odd-lot shareholdings that have evolved over the years and reorganize its capital structure to facilitate future business transactions.
LNG currently has outstanding 577,353,410 Common Shares. Based on recent data, approximately 1,052,015 or 0.002% of the Common Shares are held by an estimated 6,397 shareholder accounts with current holdings of fewer than 1,000 shares, representing an average of approximately 164 Common Shares per holder.
Shareholders with small or odd-lot holdings have had no cost effective option to dispose of their shares. The consolidation proposal provides a cost effective liquidity option for small shareholders to sell their holdings and liquidate their investment on favourable terms, relative to current and recent market trading prices without payment of brokerage fees that in many cases would be more than their sale proceeds.
As a reporting issuer, LNG is required to disseminate to registered and beneficial shareholders interim statements, annual statements and associated continuous disclosure materials. In the case of many small shareholders, the administrative cost associated with providing such services represents a disproportionately large percentage of the total share value of their investment. LNG spends a significant amount of money each year printing and mailing materials required by statute, such as annual reports and information circulars, to these small shareholders and serving their accounts through LNG’s registrar and transfer agent. The effect of the proposed consolidation will be to reduce administrative costs associated with maintaining a large shareholder base of odd-lot and small shareholders, by significantly reducing the number of these shareholders.
LNG expects that it will be necessary to issue additional Common Shares in order to raise further capital and/or make investments in additional businesses it is currently seeking to identify. Any share issuances are subject to the regulatory requirements of the TSX Venture Exchange, including minimum pricing which is generally $0.05 per share. Based on recent trading prices of the Common Shares it would be difficult to raise additional capital at such minimum pricing levels. The proposed share consolidation and stock split will result in holders of 1,000 or more Common Shares effectively being consolidated on a 20 to 1 basis. This will provide increased flexibility for LNG to structure future issuances of shares.
LNG World News Staff, September 30, 2013; Image: LNG Energy