Originally posted by Patient
You might find this of interest:
https://www.asx.com.au/documents/rules/gn33_removal_of_entities.pdf
Especially Page 3 which says that an acceptable reason to delist is where:
the directors of the entity consider that the prices at which its securities are trading on ASX are materially lower than the underlying value of its net assets and the entity is intending to provide security holders wishing to sell their holdings with an alternative mechanism (such as a redemption or buy -back facility) to liquidate their holdings at a price closer to their net asset value
So to me this implies you will get an offer for all your holdings and that that offer should reflect a price closer to the real value of your shares. If the board says 15c is below, one assumes that price will be at that or higher. This seems to explain the arbitrage buying at 0.092 or below.
Also note it is not acceptable to request to delist to:
deny minority shareholders a market for their securities in order to coerce them in to accepting an offer from a controlling shareholder to buy their securities.
On limited understanding ITD has 85m shares on issue and a market cap of $7.9m. If you paid $0.20 cents per share which is a 30% premium to the pre-announcement price you'd be paying $17.2m for a company with $24.m revenue and NPAT of $3m. I can sort of see their point.
Just a note about the company valuation. NPAT figure includes a large one-off profit from sale of their custom medical packs business. Result from continuing operations is a loss after tax of $6.1m, of which $6.9m are one-off expenses.The company's argument that the shares are somehow massively undervalued is thus unconvincing.
I took a brief look at the company a few months ago. The issue I have is with their new start up, their home test kits business. I struggle to see how a start up business that sells self administered medical tests through the mail direct to consumers will ever get the scale needed to be profitable. They're competing against free, professionally administered tests at the local GP's. I'm sure some will these test kits useful, but I just can't see mass adoption happening.
Obviously, ITD management disagrees with this view. But then, why not prove the market, and investors like me, wrong by actually making a success out of their home test kits? If they can deliver consistent profits, then the share price will rise and reflect that success. Seems to me that delisting the shares just disadvantages existing shareholders, who will now have trouble cashing out of their investment whether the company is successful or not.
