- Dual-listed Pensana Rare Earths (PM8) is leaving the ASX to focus on its primary listing on the London Stock Exchange (LSE)
- The company will delist from the ASX on February 24, after which it will only be listed on the LSE under the ticker code PRE
- The decision comes as several Pensana CHESS Depository Interests (CDIs) continue to convert to shares tradeable on the LSE
- If this trend continues, it means the company will have a lower level of liquidity on the ASX and holders of CDIs will have fewer opportunities to sell
- Thus, when considering the costs of staying listed on the ASX and the fact that most of Pensana's management team is based overseas, delisting seems like the natural choice
- Pensana CDI holders have around one month to sell their CDIs, after which underlying shares will be converted to shares tradeable on the LSE
- Shares in Pesnana are down 2.75 per cent this afternoon and currently trading at $1.76 each
Dual-listed Pensana Rare Earths (PM8) is leaving the ASX to focus on its primary listing on the London Stock Exchange (LSE).
The magnet metal rare earth oxide specialist plans to delist from the ASX on February 24, 2021, after which it will only be listed on LSE under the ticker code PRE.
Pensana said the decision to sever its ties to the ASX comes after a significant number of the company's CHESS Depository Interests (CDIs) on issue — a type of security that lets foreign companies trade on the ASX — have converted to shares tradeable on the LSE since Pensana listed in London.
Pensana said it expects this trend to continue.
Essentially, this means Pensana is anticipating a lower level of liquidity on the ASX and fewer trading opportunities for CDI holders wanting to sell. The opposite is true for Pensana's LSE listing.
On top of this, the majority of Pensana's management team is based outside of Australia as the company focusses heavily on its European operations.
Thus, when taking into account the costs of remaining listed on the ASX, moving to a singular listing in London seems like the natural choice.
What does this mean for current CDI holders?
In the weeks leading up to Pensana's official delisting, current CDI holders have four choices.
Investors can do nothing, which means the shares underlying their CDIs will be converted into shares on the U.K. register in a certified form of trading on the LSE.
If they don't want to sit idle, CDI holders have the option to take part in a voluntary share sale facility set up by Pensana to sell all their CDIs in one hit to a broker appointed by the company.
Alternatively, investors can convert all CDIs into normal shares at any time up until Pensana delists from the ASX.
Finally, investors could sell their CDIs on the ASX and cash out before the company stops trading.
However, though Pensana only delists officially on February 24, the last day to trade, sell, or convert CDIs on the ASX will be February 19.
Pensana shares tumbled in early action today, losing almost 16 per cent of their value within the first 15 minutes of trade. Shares were quick to recoup the worst of their losses, however, and at 2:50 pm AEDT, PM8 shares are down 2.75 per cent at $1.76 each.