Aim ready for a frenzy
The Alternative Investment Market is to face its biggest ever purge of members as up to thirty companies set to be ditched from the junior market under rules aimed at cleaning up the smaller companies world.
The London Stock Exchange will delist 30 companies at the start of October unless they clinch takeover deals by the end of the month under a rule change aimed at driving out hollow companies.
But analyst are warning of a series of rushed takeovers designed to meet the LSE rules, but which may not be in the best interests of investors.
The 30 business listed on the Alternative Investment Market are 'cash-shells', companies without an operating business but holding a listing on the premise they are planning to organise a takeover.
In April the LSE suspended share in 38 cash shell companies warning that unless they had done a deal by the start of October they would be delisted. Latest reported results show they have around £10 million in assets between them - largely cash bank balances.
By this weekend seven companies had agreed deals and had their sharers restored to trading. One company had been delisted after closing down, leaving thirty to clinch a deal or face the axe in two weeks time. Of these five companies - 9999, Castor Investments, GruppeM, Matisse and Raven Capital - have said they are in talks or close to a deal. To avoid delisting these companies must clinch these deals within the next few days.
The remaining 24 have made no announcement to suggest they are close to a deal. Luke Ahern, director of corporate broking at Stockbroker Corporate Synergy, said: 'AIM will be a better place once these companies have gone. Most of the rascals among company managers are in this lot and few will find it easy to get back to the market with another company.'
But Ahern warned the purge would inevitably mean some shareholders would find themselves at a disadvantage.
'There are bound to be some murky deals as a result of this. And it is fine to invest in a private company if you know that is what you are doing. But shareholders in these companies have invested in public companies which will now drop totally below the public radar.'
Even the small amounts of shareholder cash left in these companies may yet disappear. If any of the businesses decide to wind up and return all spare cash to shareholders. The cost of liabilities for directors salaries, property leases and everything else are likely to eat up much of their cash reserves leaving shareholders with little or nothing.
'The radar needs to be kept on these companies to make sure directors do not abuse the situation,' said Ahern.
The thirty companies facing delisting are:
9999
Archimedia
BWA Group
Camelot Capital
Capricorn Resources
Castor Investments
Catalyst New Opps
Chian Resources
Crescent Technology
Enola Resources
EP&F Holding
ESV A/S
Global Structured
Gruppem
Isis Medical Tech
LHP Investments
Magna Investments
Matisse Holdings
Medici Bioventures
Pannal
Perspective
Petsome
Raven Capital
Reflexion
Sino-Asia Mining
Southern Bear (formerly Croatia Ventures)
Strategic Global
Taurus Storage
Techcreation
Transvision Resources
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