Brokers Look Foran Orderly Way Out
Sydney Morning Herald
Wednesday April 2, 2008
THE collapse of Opes Prime has proven a boon to some smaller and mid-tier broking firms.
While many small-cap companies - including several explorers - remained in trading halts yesterday, their house brokers were conducting hasty bookbuilds, with the goal of placing large lines of shares with appropriate buyers to avoid deeply discounted trades. Discounting would have a devastating effect on their market value."At the moment we have our lead broker, Bell Potter, talking to Goldman Sachs JBWere about placing [the shares] with institutions, both in Australia and overseas," said the managing director of Pluton Resources, Tony Schoer.Goldman Sachs JBWere was believed to be approaching affected companies and their house brokers on behalf of its client, ANZ, which wanted to dump millions of dollars worth of relatively illiquid stock in a more orderly fashion to obtain the best possible price.Southern Cross Equities was yesterday busy conducting a bookbuild on behalf of the Perth iron-ore hopeful Gindalbie Metals. Gindalbie's largest shareholder, Malaysia's Melewar Steel, held about 7 per cent of the miner's stock via equity financing arrangements with Opes."There's a lot of demand for those shares," said the chairman of Gindalbie, George Jones. "I'm confident those shares will all be taken up. We'll relist [this morning]."The Namibian uranium hopeful Bannerman Resources was understood to be doing a bookbuild last night, targeting the Canadian market as a follow-up to a heavily supported $C21 million placement last week. Some prominent mid-tier brokers, such as Shaw Stockbroking and Patersons Securities, attempted to approach Goldman Sachs JBWere in the hope of gaining business after rumours of the share stakes circulated yesterday. But both seemed to have been rebuffed, perhaps because they were not the closest brokers to the specific companies involved.Not all of the companies hit by Opes Prime's collapse entered trading halts to sort out the situation, even though their share prices took a hit. The Queensland goldminer Citigold said about 2 per cent of its stock had been sold at a discount already, but it did not halt trading."The actions of a few people and a few lenders have caused chaos in the market," said the managing director of Citigold, Mark Lynch. "Overall as a percentage of our listed capital it's quite minor."The resources director of Admiralty, Phil Thomas, said its stock was "exceptionally liquid" and therefore was unlikely to need a bookbuild. "It's not as much an issue for our stock as others." Merrill Lynch last night emerged as a substantial holder in several mining companies, including Gindalbie, Admiralty and Apex Minerals.
© 2008 Sydney Morning Herald