Reckon price guide reduced

With Reckon shares now trading without entitlement to the GetBusy demerger and rights issue, the company has sent documentation, including how to subscribe for your entitlements, to shareholders (although technically the transaction remains subject to GetBusy being admitted to the AIM sub-market of the London Stock Exchange).

If you're set up to receive electronic communications from Computershare, the company's registry, you should have already received an email with the details. Computershare also can be contacted on (03) 9415 4000 in relation to the spinoff and rights issue.

Get busy participating – or not

If you want to participate in the rights issue in full or in part, you need to apply and make payment by 5pm on 26 July. You don't need to return the paper payment slip if you pay for your entitlement via BPAY.

And unless you wish to receive GetBusy shares in paper form, you'll also need to complete a CREST details form and return it to Computershare by 5pm on 26 July. The CREST form is included in the documentation sent to shareholders and is also available at Reckon's website.

To obtain your CREST details including a Participant ID and Member Account, you'll need to speak to your broker and determine whether they can trade on the AIM sub-market of the London Stock Exchange. If so, and assuming you're already set up to trade international shares, they'll be able to provide you with the details to complete the form.

Unfortunately, if your current broker doesn't have the ability to trade on AIM (ANZ Share Investing and nabtrade don't), you'll have to find one that does such as Commsec, Westpac or a full-service broker.

GetBusy is expected to be admitted to AIM on 4 August. 

Reducing price guide

Whether one uses Reckon's share price on the date the proposed spinoff was announced or the price when the spinoff was confirmed and ex-date was announced, either way Reckon shares have fallen but not as far as we thought they might based on our estimated valuation of $50m for GetBusy.

That could be because our valuation was wrong – as we've noted previously, valuing small, fast-growing busineses is difficult, especially those which are reinvesting their earnings to keep growing. Or it could be because the market values legacy Reckon more highly now that GetBusy's minimal earnings and around $5m in development expenditure are gone. This leaves Reckon's best business, its Practice Management division, even more prominent while also highlighting the profits and cash flow of the other remaining businesses. 

In any case, we're reducing our price guide for the stock to take into account the spinoff of GetBusy, assuming it is successfully admitted to AIM: our Buy price falls to $1.30 (from $1.70), and our Sell price falls to $1.90 (from $2.70). HOLD.

​​​​​​Disclosure: the author owns shares in Reckon and is taking up his GetBusy rights.