Alf is siding with the critics who are lambasting Allied Farmers and the New Zealand Stock Exchange for the way Allied Farmers shares have been issued to former Hanover Finance investors.
However you look at it, one bunch of shareholders was given a big selling advantage over another bunch.
Alf is putting his money on the share price falling fast long before it rises again, as Hanover investors sell out in their desperate attempts to get their money back.
Hence those who were able to sell immediately have got a much better deal than is likely for those who can’t sell until the necessary paper work has been completed.
Despite the bleats of assurance from the company, there’s a bothersome smell about it.
Hanover investors agreed last week to swap their debentures for shares in Allied Farmers, which were allocated yesterday.
Many Hanover investors wanted to sell their shares straight away but most couldn’t, because they hadn’t been issued with a Common Shareholder Number, or CSN, which is needed before shares can be traded.
Yet some people who owned other shares were able to sell, and did, by using the CSN on their broker accounts.
Kapiti sharebroker Chris Lee, a bloke with a good grasp of these things, says this created two tiers of shareholders, one of which has probably been able to get a better price for their shares than the other group will.
The stock exchange should have required a delay before shares could be sold, he says.
Allied Farmers is denying any wrong-doing, saying it followed standard stock exchange procedures.
The company’s chief executive, Paul McFie, says a special board meeting on Tuesday is a crucial step towards restoring investor confidence.
The company’s share price slumped 30% to 10 cents on Monday.
Mr McFie says the meeting is being held to discuss the company’s future, including the management of the assets acquired from Hanover, and its own rural service business.
He says many Hanover investors have expressed a lack of faith in Allied Farmers, and the board’s members are keen to come up with a plan that will persuade them the company has prospects.
Alf notes that the Stock Exchange so far has not responded to Radio NZ’s invitation to comment. The buggers want more of us to invest in shares, but they have palpably failed to clean up the casino to make investing attractive for Kiwi savers.