As the MCM Entertainment Group Limited no longer has a need for more capital raising, and the shares are not trading regularly, the company has applied to take itself off the Stock Exchange’s list of tradable shares.
The company recently went through a tumultuous time at board level over conflicts about its strategic direction. See our report from last year.
The Stock Exchange has approved the delisting request, subject to various procedural actions being taken by the company. The company had been trading under the ASX code MEG.
Following a review of the costs and benefits of retaining the Company’s listing on the Australian Securities Exchange MCM requested and received approval to be removed from the ASX official list under listing Rule 17.11.
Explaining the action, MCM said in a statement to the exchange:
The Board considered a number of factors in reaching its decision to seek approval from ASX to delist, including:
(a) A disproportionate impact on share price: As only a small number of MEG’s shares are being traded, this has on occasion had a disproportionate impact on the share price and has created considerable volatility;
(b) Listing and related costs: Maintaining a stock exchange listing adds significant direct costs to the Company’s business. In addition, there are indirect costs associated with the need to devote management time attending to matters relating to the listing which could be directed elsewhere;
(c) Lack of liquidity: MEG currently has three substantial members controlling 50,015,703 shares (68.99%) with the remaining members holding 22,483,594 Shares (31.01%). Furthermore, 91.28% of MEG’s shares are held by the Top 20 members. As a result of this lack of liquidity, there has been minimal trading in the Company’s Shares on the ASX; and
(d) The need for future capital raising: The Company has no proposals to raise further capital on the ASX.
The ASX has approved the request subject to the following conditions:
1. The request for removal from the official list of ASX is approved by an ordinary resolution of ordinary shareholders of MEG;
2. The Notice of General Meeting seeking shareholder approval to request the removal of the Company from the official list must include a statement to the effect that the removal will take place no earlier than one month after the approval is granted; and
3. MEG release the full terms of this decision to the market immediately upon the Company’s directors resolving to seek removal of MEG from the official list of ASX.