E&P Financial enters trading agreement ahead of proposed delisting

In an announcement on the ASX on Monday, E&P Financial Group Limited said it has entered into a “non-exclusive non-binding heads of agreement (HOA)” with FinClear.

Under the deal, E&P said the company and Finclear “intend to consider potential terms upon which the Company's shares may be onboarded to the FCX Liquidity Venue to facilitate periodic trading opportunities for shareholders and wholesale investors if the Company’s shareholders approve the Company’s proposed delisting at the EGM”.

In September, just a week after the Senate approved a motion moved by Pauline Hanson’s One Nation paving the way for an inquiry into the Dixon Advisory debacle, E&P announced it would seek to delist from the ASX.

Although E&P didn’t elaborate on the regulatory proceedings that have contributed to its decision to exit the ASX, in a listing last month it said the benefits of being listed on the stock exchange are “materially outweighed” by the potential benefits of delivering the next phase of growth in an unlisted environment.

The firm’s shareholders were expected to make a decision on the delisting on 24 October, with the board said to be entirely behind the motion for several reasons, including a “consistently and materially” low trading price, hefty direct costs associated with being listed on the ASX, and having “no near or medium-term requirement to raise capital”.

However, the vote has been delayed a week to 1 November 2024, with E&P citing shareholder need for further information.

In its filing on Monday, the company said that the agreement with FinClear is in line with its previous announcements, in which it noted it would “explore the potential to provide shareholders with future access to liquidity via third party platforms”.

The agreement comes just two weeks after FinClear subsidiary FCX, which labels itself Australia’s first platform for facilitating private market secondary transactions, got the green light from both the Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia (RBA).

On 8 October, FCX was awarded the “first-of-its-kind” Australian Market Licence and Clearing and Settlement Facility Licence in respect of the “trading and clearing and settlement of the FCX Market”,

The company added that this makes it the “first fully-regulated platform for facilitating private market secondary transactions”.

“The licences enable the FCX Market to trade securities in private and unlisted public companies and interests in managed investment schemes, creating the world’s only distributed ledger-enabled, fully regulated private market,” it said.

According to E&P, subject to the FCX Liquidity Venue commencing operations, FCX’s licence would allow “onboarded wholesale investors to buy and sell securities in unlisted companies through the FCX Liquidity Venue, and would allow onboarded retail shareholders to sell securities in unlisted companies, in each case during pre-agreed periodic liquidity windows”.

While it noted that the agreement does not limit E&P from considering other providers, the firms “intend to progress discussions with an aim to reaching mutually acceptable terms if E&P determines that the FCX Liquidity Venue, once fully operational, can assist E&P with meeting its future liquidity objectives as outlined in the NoM and Supplementary Disclosure”.

“While there can be no assurances that definitive terms will be agreed with FinClear or any other third party provider, the Company is committed to exploring potential additional periodic liquidity mechanisms for buyers and sellers of the Company’s shares if the Delisting Resolution is passed at the EGM and the delisting of E&P from the ASX official list proceeds,” it added.