abaco_markets_split.htm

July 1999 Table of Contents

ABACO MARKETS SPLITS SHARES

Abaco Markets shareholders approved a 2-for-1 share split in May. This came as the share price of Abaco Markets reached $10, almost double the price of the shares sold in its November 1997 Initial Public Offering.

"The bid price for our stock has recently been listed at $10 per share," said Reginald Sands, director and treasurer of Abaco Markets. "If you owned 100 Abaco Markets shares prior to the split, your shares would have a value of $1,000. After the share split, you will own 200 shares and the market makers will restate the price somewhere in the vicinity of $5 per share. As you can see, the value of your shares will still be $1,000. Also bear in mind that the dividend rate per share will be split in half, although the dollar amount will remain the same, as you will have twice as many shares. Immediately after the split, the company's registrar and transfer agent will mail to you a new book entry receipt and acknowledgement, reflecting the change in the number of shares you own."

The immediate question asked at Abaco Markets' AGM was: "If there is no change in the value of my shares, or the amount of dividends I receive, what is the point of the exercise?"

Gregory Cleare of KPMG Corporate Finance, the company's financial advisors, explained: "There are three main reasons for a share split: affordability, message and psychology. As shares are generally traded in blocks of 100, by splitting the shares and price, the minimum investment becomes $500, not $1,000, for the smaller investor. This makes the shares more affordable to the general public. The message that the management of Abaco Markets is giving is that they are confident in the future of their company, and they are expectant that the price will appreciate again. And regarding the psychology, the shareholders of Abaco Markets who bought in during the November 1997 offering will now own two shares for the price of one. That is a handsome return in just 18 months."

The confidence displayed by Abaco Markets management is confirmed by their chairman, Craig Symonette: "We continue to stay true to our strategic direction which we laid down in our offering prospectus. Careful implementation of our plans has to date proved successful and created significant shareholder value. It is our aim to continue in this direction, as we are confident in both the ability of our management and the economy of The Bahamas.

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