Malawi Stock Exchange (MSE)-listed Press Corporation (PCL) plc says the approved subdivision of its share price will enhance the stock’s marketability and increase the volume of shares for trading.
PCL board chairperson Randson Mwadiwa told the conglomerate’s 52nd Annual General Meeting in Blantyre on Friday that the company’s share price jumped by 118 percent to about K8 700 as of May this year from about K4 000 per share during the same period last year.
He said that during the period, trading activity remained relatively concentrated due to the high nominal trading price of the company’s shares, which closed last Friday at K9 521.77 per share.
With the current share price, it means PCL subdivided shares could be priced at K272 per share.
“The board believes that the proposed subdivision may improve affordability and encourage broader market participation without affecting the underlying value of the company,” said Mwadiwa.
The proposed subdivision, according to PCL, will subdivide each one existing ordinary share into 35 ordinary shares, which means that shareholders whose names appear in the company’s register will receive 34 additional ordinary shares for each one ordinary share held.
The share split will also increase the number of issued ordinary shares in proportion to the approved subdivision ratio while preserving each shareholder’s proportional ownership interest in the company.
“The transaction does not raise additional capital for the company and does not alter the rights attached to the company’s existing ordinary shares,” reads the PCL statement.
To illustrate further, the share subdivision means that a shareholder holding 1 000 shares will hold 35 000 shares after the implementation of the proposed subdivision.
Speaking during the AGM, Mwadiwa said the subdivision of shares will improve affordability of the company’s shares as it is expected to reduce the cost of acquiring individual shares, thereby improving accessibility.
He further said the move will also enhance market liquidity as a lower share price is expected to encourage greater trading activity by increasing the number of market participants.
Said Mwadiwa: “It [subdivision of shares] will also help in broadening the shareholder base. The board expects that the proposed subdivision will make the company’s shares more attractive to a wider universe of investors, including retail investors, pension funds, collective investment schemes and other institutional investors.
“It will help in promoting wider participation in ownership and the increased affordability may facilitate wider participation in the ownership of one of Malawi’s leading listed companies.”
He also said the subdivision will align with international capital market practice, adding that subdivisions of shares are widely recognised capital market tools used by listed companies globally to improve the marketability and accessibility of their shares without affecting shareholder value.
Stock market investor Brian Kampanje urged PCL to follow all the due process in the share subdivision, adding that it will enable shareholders to cash in part of their stocks without losing out on shareholding.
Minority Shareholders Association of Listed Company secretary general Frank Harawa said the arrangement is a good deal as shareholders will see their shares increasing and available to other shareholders.
“This is a worthwhile move and we want to commend PCL board and management for this decision. Imagine someone who has 1 000 shares, will see the shares rising to 35 000,” he said.
PCL shareholding structure before and after the share split will be as follows; Press Trust 42.48 percent, Old Mutual Life Assurance Company 21.39 percent and others 36.13 percent.
The additional shares will be listed on MSE on August 31 this year.
PCL share price split proposal comes a year after Standard Bank plc successfully subdivided its shares into the multiple of five, thereby reducing its share value.
