Calima Energy Limited (ASX: CE1) has formally applied to the Australian Securities Exchange (ASX) to be removed from the official list. This decision comes after the company’s shares were suspended from trading on 2 July 2024 and a subsequent detailed review by the board of directors. The delisting, subject to shareholder approval, is scheduled for 25 November 2024.
The board has unanimously concluded that delisting is in the best interests of shareholders. The lack of liquidity, the sale of significant assets, and substantial listing costs were highlighted as critical reasons for this move. The following article explores the reasons behind the decision, its consequences for shareholders, and the upcoming shareholder vote.
Reasons for Delisting
Below are some of the reasons why Calima Energy is delisting from ASX:
Suspension of Trading
Calima Energy has been suspended from trading since 2 July 2024. The company would need to re-comply with the first and second Chapters of the ASX Listing Rules to have its shares re-quoted. However, the company has determined that it cannot meet these requirements in the near future. Delisting from the ASX has become the most practical course of action.
Lack of Liquidity
With trading suspended since July, Calima’s shares have not been actively traded. The company’s ability to meet re-listing requirements remains unlikely, so the lack of liquidity will persist. In this context, the board sees little benefit in remaining on the ASX.
Sale of Major Assets
Earlier this year, Calima sold its wholly owned subsidiary, Blackspur Oil Corp., which held the company’s critical assets: the Brooks and Thorsby fields in Canada. With the planned sale of its remaining subsidiary, Calima Energy Inc., the company will hold no operational assets apart from cash reserves. This lack of significant operational holdings further supports the decision to delist.
High Listing Costs
The board has estimated that maintaining an ASX listing costs approximately $200,000 annually. In addition, considerable management time is required to address ongoing compliance obligations. According to the board, these resources could be better used to develop new project acquisitions. The company sees little tangible benefit in remaining listed while incurring these expenses.
Minority Shareholders Remain Protected
The board has also emphasized that the delisting will not diminish the rights of minority shareholders. Shareholders are currently unable to trade their shares due to the suspension, and delisting will not affect their ability to sell shares off-market. Moreover, the company will continue to be an unlisted disclosing entity, maintaining transparency with shareholders under the Corporations Act 2001.
Consequences of Delisting
Shares No Longer Tradeable on ASX
Following the delisting, Calima Energy’s shares will no longer be quoted on the ASX, and shareholders cannot sell their shares on the exchange. However, since trading was suspended in July, shareholders have not been able to sell their shares on ASX for some time. After delisting, shareholders can still sell their holdings off-market to willing third-party buyers, which is in line with the company’s constitution.
Conversion of CHESS Holdings
For shareholders with CHESS holdings, their shares will automatically convert to the certificated sub-register. No action is required from shareholders for this conversion.
Disclosure Obligations Continue
Despite the delisting, Calima Energy will remain an “unlisted disclosing entity,” provided it retains more than 100 shareholders. The company will continue to provide disclosure of material matters under the Corporations Act. It will also lodge annual and interim financial statements as required by law. These reports and updates will be made available on the company’s website.
Loss of Market Price Indicator
Once delisted, a readily available market price for Calima Energy shares will no longer be available. Shareholders wishing to sell their shares will need to negotiate prices directly with potential buyers. Without ASX listing, the liquidity of shares may decrease further.
Limited Capital Raising Ability
As a privately held public company, Calima Energy will no longer have the option to raise funds from the public using a fundraising document with limited disclosure. If the company chooses to raise capital post-delisting, it will need to issue a full prospectus or pursue private placements to sophisticated investors.
Shareholder Rights Remain Unchanged
The delisting will not affect shareholder rights under Calima Energy’s constitution. Shareholders will continue to receive notices of meetings and vote on company matters. They will also be entitled to any dividends declared by the company in the future.
Shareholder Vote and Indicative Timetable
Calima Energy has scheduled a general meeting on 14 October 2024, where shareholders will vote on the delisting proposal. The decision will be passed by a special resolution requiring the approval of 75% of voting shareholders.
An equal access share buy-back is currently in progress, allowing shareholders to sell their shares before the delisting. The company intends to buy back up to 363,627,306 shares, representing approximately 61% of the total shares on issue. The shareholder vote results will determine whether the company will be delisted on 25 November 2024.
Conclusion
Calima Energy’s decision to delist from the ASX marks a significant change in its future direction. The company’s lack of operational assets and inability to re-comply with listing requirements makes delisting a logical step. While shareholders will lose the ability to trade shares on ASX, the company will continue to provide transparency through its disclosure obligations. As the company moves forward with new project acquisitions, the delisting will enable it to allocate resources more efficiently. In the near future, shareholders will be able to cast their votes on this proposal and shape the future path of the company.
