Escrow Watch: There’s a doozy coming out this month
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Every two weeks, Stockhead takes a look at the small cap companies that are releasing shares that have been locked away in escrow.
Escrow refers to shares that are held by early investors or directors restrained from selling for a year or two.
The release of escrowed shares can have a big impact on stock price, because a sudden influx of stock onto the market can depress the shares you own.
This month there are some big moves: accounting software company Cape Range (ASX:CAG) has over half of its issued shares coming onto the market at the end of the month as the 24-month relisting escrow period finishes.
The company has been around since 1988 and has a past littered with failures.
It started as an oil company, and later shifted into tech, rebadging as Cape Range Wireless. Its decade spent as ‘Wireless’ was almost entirely spent in the hands of administrators and people wanting to restructure it.
But come 2009 it was back, trying to buy into Zimbabwean and Filipino gold mines. Unfortunately these were as unsuccessful as the oil and tech ventures, falling over when a partner bailed on paying back a $950,000 loan.
A series of failed mergers and reverse takeover offers followed, including with tech company Quantify (ASX:QFY), and the ASX finally put shareholders out of their misery in 2016, booting the company from the bourse.
This time, they say, it’s different, having relisted and bought a Malaysian software company called Biztrak in 2017.
However, a massive share price spike in June 2018 generated three ASX queries as to the reason why, and the stock has been trickling lower ever since.
It made $278,000 in the last quarter, but mercifully also only spent $346,000, preserving its $4m in cash.
Colon cancer diagnostic maker Rhythm Biosciences (ASX:RHY) has more than a third of its issued stock coming out of escrow in the next month, while Straker Translations (ASX:STG) has over a quarter of its shares coming out.
The Kiwi company listed in October last year and management and major shareholders had a large chunk of shares escrowed
Theta Gold (ASX:TGM) has two lots coming out: one in November and another in December, meaning over a quarter of their stock will be in the market in the new year.
The remaining nine companies are spitting out minuscule quantities of shares — certainly not enough to rattle the cages of any nervous investors.
|Code||Company||Date of Release||Shares||% of company|
|TGM||Theta Gold Mines||24 November||67,070,707||15.36%|
|SFM||Santa Fe Minerals||22 November||1,250,000||1.72%|
|CAG||Cape Range||30 November||46,666,667||55.78%|
|A1G||African Gold||4 December||900,000||1.55%|
|STG||Straker Translations||29 November||14,237,143||26.87%|
|GMN||Gold Mountain||28 November||22,000,000||3.61%|
|CRS||Caprice Resources||28 November||1,125,000||3.44%|
|RHY||Rhythm Biosciences||7 December||38,500,000||38.21%|
|CNL||Celamin Holdings||20 December||3,786,760||2.54%|
|TGM||Theta Gold Mines||31 December||46,645,701||10.68%|