Problem solved:
Post by CaptainANZAC on Hot Copper explains the mechanics:
There is a lot of incorrect commentary on what this means but that is not surprising since dual listings are not that common, and poorly understood.
Here is the crux of it: it is not a 1:5 reverse split. It is a 1:100 reverse split. Shares outstanding will reduce from 2.1 billion (yikes) to 21 million which is pretty much what you see on NASDAQ for company's at this stage. CDI's on ASX will trade at ratio of 5 CDIs to every 1 share of common stock traded on NASDAQ. So, what does this mean?
For ASX holders you have to get the number of shares you hold (say 5,000) then divide that by 100 (for the reverse split (to give you 50 shares of common stock)) then multiple that by 5 (for the 5:1 ASX to NASDAQ ratio mentioned above) such that you will now own 250 CDIs. In other words, when you divide your holding by 100 and then multiple 5 it is mathematically the same as dividing your initial holding by 20!
For NASDAQ holders you get your ADR holding (say 250) and multiply it by 20 (to get you back to the number of ordinary shares you hold given ADR's presently trade on the basis of 20 ordinary shares for 1 share of common stock) to get to 5,000 ordinary shares and then I divide that number by 100 (being the reverse split) to get to 50 shares of common stock which is what I will have on NASDAQ afterwards. In other words, multipling my current ADR holding by 20 and then dividing by 100 is mathematically the same as dividing my ADR holding by 5 to get to my future common stock holding on NASDAQ.
Secondly, trading is completely unchanged (other than the reverse split). The only difference is that you will need to cast your votes at shareholders meeting via CHESS Nominees exactly like many shareholders who hold through nominees or custodians like NAB or HSBC do today.
Lastly, here is ECONOMICS 101: value is independent of capital structure. Google it. So the run off today is a lot of idiot day traders. As for indexing issues... come on ... do we Australians think the indexes are bigger and more numerous here in OZ versus the world's largest capital market. Can anyone spell parochialism?
