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Allied Farmers contemplates legal action over NZX 50 Index exclusion

Friday 19th February 2010

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Allied Farmers is mulling legal action against NZX following its abrupt exclusion this morning from the NZX 50 Index, which was to have begun next Monday.

The NZX informed brokers and institutional investors in a subscribers-only announcement on Monday that Allied would be included in the main NZSX index from Monday next week. The Allied share price rose over the course of the week from 10 cents to 12.3 cents yesterday, a 23% increase, apparently reflecting institutional investors reweighting of portfolios tied to the NZX50 benchmark.

More than 8 million Allied shares changed hands this week, with the share price falling 11.3% to 11 cents today, following NZX's announcement to the same group today that the Feb. 22 inclusion in the index was now cancelled. More than 1.6 million shares traded today.

Trading volumes have been volatile since the company took on the assets of failed finance company Hanover Finance, recapitalised and emerged as a potential top 50 company in December.

While the share movements of the last week have been substantial in percentage terms, the share price is a fraction of the $2.43 peak seen in mid-2005.

"We are considering whether we take legal advice as to whether to pursue this more vigorously," managing director Rob Alloway told BusinessWire. The company had received no calls or explanation for this morning's NZX action, other than the email informing it that it would no longer be included in the NZX50 from next Monday.

NZX didn’t immediately return calls to BusinessWire.

Businesswire.co.nz

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