NZX probes Blis 'anomaly'
The stock exchange has confirmed an inquiry into potentially anomalous trading in Blis Technologies shares in the leadup to a significant share conversion on Tuesday.
Yesterday afternoon NZX said the trades had been spotted by market surveillance staff "during the period when the price for the conversion of cumulative preference shares to ordinary shares was being determined".
Blis, maker of a probiotic lozenge aimed at preventing sore throats, told the market yesterday it had written to the NZX and the Financial Markets Authority "seeking assurances that certain trading of ordinary shares in BLT ... did not breach NZX rules and/or relevant securities legislation".
The small company, with market capitalisation of less than $5 million, on Tuesday disclosed share trades between May 2 and May 7 by substantial shareholder Edinburgh Equity Nominee.
The trades involved the sale of 2.7 million shares for about $36,000, reducing its stake from 10 per cent to 8.5 per cent.
The market price of Blis shares fell from 1.8c to 1c during the period.
Conversion of Blis cumulative preference shares took place on May 8, with the conversion price determined by the share price during the previous 20 days.
After the share conversion Edinburgh Equity Nominee disclosed a stake of 36.9 per cent in Blis Technologies.
Directors of Edinburgh Equity Nominee are Dunedin investor Tony Offen, a director of Blis Technologies, and Forsyth Barr chairman Eion Edgar.
Neither was immediately available for comment, nor were the independent directors of Blis, Bevan Wallace, Max Shepherd and Colin Dawson.
The convertible preference shares were issued in March 2009, underwritten by Edinburgh Equity Nominee, which also had an option to acquire more a year later. The last Blis annual report showed Edinburgh Equity Nominee had 2.09 million of the 4 million preference shares on issue.
Each preference share converted to $1 worth of Blis ordinary shares, based on the price in the 20 days before May 8, so the lower the price the more shares would be acquired in the conversion.
The conversion price announced this week was 1.342c, leading to the issue of about 300 million new shares.
Blis has not been an outstanding performer, producing a loss of $1.4m in the year to March 2011 and $0.5m a year earlier.