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# Agria Corporation Message Board

• jd11590 jd11590 Jan 8, 2013 10:39 PM Flag

## Follow the bouncing ball...You can't dilute US ADR's with a reverse split of common shares.

Using round numbers: Assume 55,500,000 ADR's and 111,000,000 common shares outstanding before the reverse split. Assume before the split you own 10% of the company, whether it be 5,550,000 ADR shares or 11,100,000 common shares. The 3:1 reverse split reduces outstanding common shares from 111,000,000 to 37,000,000. The 3:1 reverse split of common also reduces outstanding ADR's from 55,500,000 to 37,000,000. 37,000,000 common shares / 37,000,000 ADR's = 1:1 ratio

Your 10% ownership of common shares is reduced to 3,700,000 from 11,100,000 (3:1 split), but it is still 10%. Each share of common is equal to 1 ADR after the split. Before the split you had 11,100,000 (10% of 111,000,000) common shares equal to 5,550,000 (10% of 55,500,000) ADR shares. After the split you have 3,700,000 (10%) common shares equal to 3,700,000 (10%) ADR shares.

Your 10% ownership of ADR shares is reduced to 3,700,000 from 5,550,000 (1.5:1 split), but it is still 10%. Each ADR is equal to 1 share of common after the split. Before the split you had 5,550,000 (10% of 55,500,000) ADR's equal to 11,100,000 (10% of 111,000,000) common shares. After the split you have 3,700,000 (10%) ADR's equal to 3,700,000 (10%) common shares.

Not sure if this stock will go up or down, but I hope the above assists those trying to determine the impact of the reverse split on their ownership % or the foreign ownership %. If I am wrong, please explain.

Side note, reverse splits done to maintain listing compliance fair much better statistically than reverse splits done as a result of chronic losses. Agria doesn't do much now and I am not sure if it ever will, but it does have a slightly more than 50% ownership in a New Zealand publicly traded company whose stock has gone up about 25-30% in the last month to 0.48 per share NZ as I type. I am guessing a lot of the increase has to do with the announcement of dividends on the horizon. At a translation rate of .82 USD to NZD that is about 0.395 USD per share. Agria owns directly or indirectly about 375,000,000 shares (ballpark est). I estimate the market value of it's investment in PGW.NZ is approximately \$148,000,000 million USD or over \$2,50 per ADR of Agria (based on approx. 55,500,000 ADR's outstanding). In other words, if Agria sold the investment in PGW.NZ and had no debt and distributed the proceeds to shareholders, each ADR would receive over \$2.50 per ADR. After the reverse split the distribution would be about \$4.00 per ADR.

Am I missing something here?

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• Agria's subsidiary PGW.NZ generally reports 6 month results (for the six months ending December) in February. They declared a dividend plan in December. You generally don't see that if results are poor. I am curious.

• i do not think anybody is saying the reverse split reduces their percentage of ownership but the cut in shares for the ADRs sure could if their is other ordinary shares not held as ADRs-------the 1 ordinary shares would suddenly have the same value as the ADR shares which currently have twice the value because we now hold 2 ordinary shares for each ADR that we own-----if Mr Lai owns 88 percent then he holds shares that are not ADRs and would benefit greatly if his non-ADR shares suddenly becomes worth as much as an ADR share

• You are totally wrong!

Look at this: (from 2010 annual report)

"As of June 1, 2010, 125,160,000 of our ordinary shares were issued and outstanding. To our knowledge, we had only one record shareholder in the United States, The Bank of New York Mellon, which is the depositary of our ADS program and held approximately 39.0% of our outstanding ordinary shares as of June 1, 2010. "

so there are 48,812,400 ordinary shares registered under ADS. with 1:2 ADS ratio, that means 24,406,200 GRO shares trading in NYSE.

With 1:1 ADS ratio, that means 24,406,200 shares now represent 24,406,200 ordinary agria shares, that's 19.5% of total outstanding ordinary shares!!!

Split or reverse split doesn't matter here!

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