Painless way to get to market

Jim Bracknell (L) and Geoff Brown offer help to a certain type of company. Picture / Richard Robinson.

Two shell companies which debuted on the stock exchange on Friday will offer a new route to market for businesses.

Vistron and Holly Springs, unused spin-offs of the now defunct Newcall Communications, were part of wider plan to provide a "one-stop shop" for listing on the NZX alternative exchange, said the chairman Jim Bracknell.

They will be used to do friendly reverse takeovers of companies that want an easy way on to the exchange.

Both companies are chaired by Bracknell (better known as chairman of Plus SMS) and are majority owned by Brett Wilkinson, the principal of investment company Wilkinson White. They each have about 1700 shareholders.

"We hope we will be approached by potential vendors who want to list," said Bracknell.

"And we will provide a quicker, less costly way to get to market."

By coming on board with an entity that is already listed, companies could avoid the hefty marketing and underwriting costs associated with a traditional float.

Another plus was that unlike typical shell companies, which were usually the remains of failed listed companies, Vistron and Holly Springs had no trading history and no creditors. That meant they did not come with any of the litigation issues that sometimes sometimes haunted other shell companies..

When a company had creditors, the settlement process was often time-consuming.

Bracknell hoped the two shells would provide a blueprint for a raft of new listings of smaller companies over the next few years.

He said not all companies would be suited to this kind of listing.

They would ideally be high-growth stories, which were already generating revenue, and were looking to raise between $10 million and $20 million.

There were plenty of successful companies where the owners could be looking for an exit strategy or more liquidity but did not have the experience or resources to get to market by themselves, Bracknell said.

The new concept has the endorsement of the NZX, which is hoping it will inject some life into its NZAX market.

NZX products manager Geoff Brown said the arrival of the shell concept would provide a useful stepping stone for companies of the right size.

He said the decision to endorse the concept did not require any changes to listing rules but it did involve reviewing the existing regime to ensure it all fitted comfortably.

Bracknell said the board was in no hurry to do the reverse takeovers.

"We have enough cash to keep these two listed for about a year," he said.

"If the concept is going to be successful and lead to the listing of further shells, then it's important to get the first two right."