Allergy Therapeutics plc (LSE:AGY) has announced plans to cancel the admission of its ordinary shares to trading on London’s AIM market and re-register as a private limited company, citing limited share liquidity, listing costs and difficulties accessing equity capital.
The biotechnology company, which specialises in allergy immunotherapies, said its board had unanimously concluded that the proposed changes would be in the best interests of the business and its shareholders.
The proposals will require shareholder approval at the company’s forthcoming annual general meeting, with both major shareholders indicating their intention to vote in favour.
Board Cites Low Liquidity and Market Valuation Concerns
Allergy Therapeutics said the decision followed a review of its strategic direction, financial market conditions and organisational structure.
Despite what the company described as positive commercial and operational progress, the board believes its market valuation has been adversely affected by challenging financial conditions, a limited free float and low trading liquidity.
The directors consider that the company’s current market capitalisation does not adequately reflect the underlying value of the business.
The board also highlighted the costs associated with maintaining an AIM quotation, including regulatory compliance obligations and management resources devoted to meeting public market requirements.
According to the company, removing these obligations would allow management time and financial resources to be redirected towards business operations and development activities.
Equity Fundraising Challenges Influence Delisting Proposal
Another factor behind the proposed cancellation is the board’s assessment of the company’s ability to raise additional equity capital through AIM.
The directors believe that securing significant new investment through the market would be difficult in the short to medium term.
They also consider that any potential fundraising might not be achievable at a valuation acceptable to existing shareholders.
These concerns contributed to the board’s unanimous recommendation that shareholders approve both the cancellation of AIM trading and the company’s re-registration as a private limited company.
Shareholder Approval Required at Annual General Meeting
The proposed cancellation and re-registration will be submitted to shareholders through special resolutions at the company’s annual general meeting.
Under Rule 41 of the AIM Rules for Companies, cancellation of admission to trading requires approval from shareholders representing at least 75% of the votes cast.
Allergy Therapeutics confirmed that both of its major shareholders support the proposals and have indicated that they intend to vote in favour of the relevant resolutions.
If the resolutions are approved, the company expects the final day of trading in its ordinary shares on AIM to fall approximately five business days after the annual general meeting.
The precise timetable will be provided in a shareholder circular accompanying the notice of the meeting.
Matched Bargain Facility Planned Following Delisting
Allergy Therapeutics intends to establish a matched bargain facility to provide shareholders with a mechanism for trading their shares after the proposed AIM cancellation.
Such arrangements allow buyers and sellers to be matched outside a conventional stock exchange trading environment.
However, trading through a matched bargain facility may be less frequent than on AIM, and shareholders may experience reduced liquidity or greater difficulty finding counterparties for transactions.
Following re-registration, the company would operate as a private limited company rather than an AIM-listed public company.
Shareholders will receive further information about the implications of the proposed changes in the forthcoming circular.
Hong Kong Listing Remains Under Consideration
Allergy Therapeutics confirmed that it continues to explore the possibility of obtaining a primary listing on The Stock Exchange of Hong Kong Limited.
The company said this intention remains unchanged regardless of whether shareholders approve the proposed AIM cancellation and re-registration.
No definitive timetable for a potential Hong Kong listing was provided.
The company has not announced a formal listing application or confirmed when such a transaction might take place.
Outlook
Allergy Therapeutics will now prepare a detailed shareholder circular outlining the reasons for the proposed delisting, the anticipated timetable and the implications for investors.
The proposals remain conditional on the necessary shareholder approvals, including the requirement for at least 75% support among votes cast for the AIM cancellation.
If approved, the company intends to continue operating as a privately registered business, with a matched bargain facility available for shareholders seeking to trade their holdings.
The potential Hong Kong listing remains a separate strategic objective, although its timing and eventual completion have not been confirmed.
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