At least half of Myer’s shareholders are trapped with parcels of stock too small to sell, compounding the pain felt by thousands of retail investors who have been hammered by the department store’s faltering fortunes.
Shareholdings are considered “unmarketable” when their value dips bellow $500, because they are difficult to sell and the cost of doing so can eat up much of their sale value.
In September last year 17,150 Myer shareholders – or 35 per cent of its share registry – had unmarketable parcels based on a 77¢ share price, according to the company’s 2017 annual report.
At that time there were 23,467 shareholders – making up 47.9 per cent of the register – with parcels of fewer than 1000 shares.
Based on Monday’s share price of 38¢ all 23,467 of those investors would have parcels that are now unmarketable.
Another 33 per cent of the register (16,173 investors) had shareholdings that would now be worth between $380 and $1900, suggesting well over half of all Myer investors have unmarketable parcels.
The numbers underline how badly the collapse in Myer’s share price has hit retail investors, many of whom bought into its 2009 float – which was spruiked with the help of former Miss Universe Jennifer Hawkins – at $4.10 a share.
The issue of unmarketable shares has also become fodder in Myer’s ongoing battle with its largest shareholder Premier Investments, which in October said the department store’s share register was “better suited to a speculative junior mining stock” and was “another embarrassment to the great Myer name”.
It is not uncommon for companies to buy back unmarketable parcels from shareholders.
Virgin Australia announced plans in February to buy back shares from 21,000 investors whose shareholdings had slipped into unmarketable territory, with chair Elizabeth Bryan saying it gave those investors “the ability to sell their shares at an appropriate price and in a convenient, cost-effective manner”.
The Virgin buyback was worth about $5 million and represented 0.2 per cent of issued capital.
The total amount of Myer stock held in unmarketable parcels of fewer than 1000 shares makes up 1.4 per cent of shares on issue, while another 4.5 per cent of stock is held in parcels of between 1000 and 5000 shares.
Premier Investment will be trying to gain those shareholders’ support if it follows through on threats to hold an extraordinary general meeting to have Myer’s current board tossed out.
A Myer spokesman declined to comment on whether it would consider a buy back, but said the company could “assure shareholders that we are trading the business more aggressively to drive improved sales, profitability and shareholder value”.
“To deliver this, we have a renewed focus on product, price and customer service, as well as maximising our online business,” he said.
Myer’s shares jumped as much as 14 per cent on Friday based on reports rival store David Jones was planning to launch a takeover bid for the company. David Jones said the rumours reports had “no basis”.
Share closed 0.10 cents higher at 38¢.