Investor lobby groups take stock exchange to task

Proposals by the ASX to free up capital-raising rules for small- and mid-sized companies could be headed for a humiliating defeat after John Brogden's Financial Services Council weighed, belatedly, into the debate.

Proposals by the ASX to free up capital-raising rules for small- and mid-sized companies could be headed for a humiliating defeat after John Brogden's Financial Services Council weighed, belatedly, into the debate.

Accusing the ASX of running a "race to (the) bottom" in its plan to allow the boards of all companies worth less than $300 million to issue an additional 25 per cent of their shares each year, the FSC has recommended ditching the concept.

Even worse for the ASX, and its general manager of capital markets, Richard Murphy, who has been running the "Strengthening Australia's Equity Capital Markets" proposal, the two largest investor lobby groups are suggesting the exchange did not really consult before making its proposals public.

The Australian Council of Superannuation Investors' submission claimed the "consultation process appears to have been predominantly focused on those market participants who stand to benefit from a relaxation of ... capital-raising rules".

ACSI, which is seen as coming from the left side of the political spectrum because it represents union super funds, reckons none of the funds was consulted.

The FSC, on the "right" side of politics, was less pointed but its pithy submission said "we believe more regular interaction between the FSC's investment board committee and ASX executives would assist when such changes are contemplated".

To Insider's mind, it seems strange not to sound out funds that invest something like $2 trillion of superannuation money before giving public company directors greater licence to dilute existing investors.

The FSC's arrival could be the final nail for the proposal, which needs the corporate regulator's sign-off.

GOING SOUTH

ASX explorers were being wooed yesterday by Peru's Stock Exchange, which is trying to encourage dual listings to bolster its bolsa.

The chief executive of the LSE (that is Lima, not London), Francis Stenning, speaking in Sydney at a conference encouraging Australian investment south of the Panama Canal, made a pitch to turn his exchange into "the equities gateway to Latin America".

There is no shortage of Australian explorers running around Peru, and South America in general. The minerals testing group Campbell Brothers already has laboratories in the region. Campbell, which Insider noted yesterday fell after reporting strong results and increased dividends, yesterday rallied $2.86 to $59.56 amid the general market rise.

PAINT IT BLACK

Alesco shareholders ought to be keeping a closer eye on the benchmark ASX index than movements in their own share price. At the bottom of last week's market, the S&P/ASX 200 index had shed almost 9 per cent since Dulux launched its $2 a share offer on May 1.

Among the host of conditions in Dulux's offer document is the standard "index out" clause, which basically gives a bidder the option of withdrawing an offer if the market falls by more than 10 per cent.

In Dulux's case, it has made its offer conditional on the index not closing below 3950 on three consecutive days. Last Friday, the market sank to within 100 points of touching that level. The fragility of the sharemarket at the moment must be giving Dulux's board cause for concern.

Dulux this week put in an amended version of its documents after Alesco's advisers apparently raised a couple of issues, including that Alesco shares had mostly traded above the offer price.

The shares shot above the bid almost immediately, presumably due to hedge funds and others punting that the paints and adhesives group would have to raise its bid.

By the time Dulux's revised document was published on the ASX on Monday, however, Alesco's share price was under $2, and try as it might in trading yesterday, still could not reach that level.

LOW ON JUICE

Consumer electronics group Ambertech last night warned that it expects to make losses of up to $1.3 million from trading, with a worse outcome possible as it reviews goodwill on its balance sheet.

It follows the retailer Retravision Southern appointing administrators this week, and Woolworths deciding earlier this year to close up to 100 Dick Smith stores.

Ambertech last year suffered a fall of more than 90 per cent in net profit to $126,000 as sales shrank on both the consumer and professional side of its business.

There were reports that the company had reduced staff and cut executive salaries as a result. The latest loss prediction includes $465,000 of restructuring costs plus $300,000 "associated with the move of the business's head office".

Ambertech's board undershot in November on their profit warnings for the half-year. They tipped a sales fall to between $28 million and $30 million - the actual was $26.9 million - and a net result anywhere between a $250,000 loss and a $250,000 profit. The actual loss was $262,000.

The company said that it is testing for the "likely impairment" of goodwill, which was sitting at $3 million on its most recent balance sheet.

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