Sappi to exit London

Johannesburg - Papermaker Sappi is poised to delist from the London Stock Exchange (LSE) in a move to slim down the group's cost base.

"The low trading volumes do not warrant the listing and associated costs," said Sappi CEO Ralph Boëttger.

John Thompson, an analyst for Investec Asset Management, concurred: "Why employ an illiquid exchange when it's not effectively utilised?"

UK registered shareholders to date hold a mere 0.036% of the firm's total issued capital, a statistic Sappi found tough to justify when considering the preservation of the UK-based listing.

This is not to mention the host of additional business-related costs Sappi would save on, such as listing and publicity fees.

"The rationale for our 1992 listing on the LSE was to establish a presence in a key financial market to access funding for our European expansion, and to position Sappi as a leading global pulp and paper company," Boëttger said in a press statement.

"Recent developments have also made it much easier for foreign shareholders to trade directly on the JSE, and in addition we have our New York Stock Exchange (NYSE) listing." The NYSE is a secondary listing.

The UK-based register will be closed on November 2 2009, from which point shareholders in the LSE listing will be transferred to the South African register.

Although some might argue the firm's UK listing still affords the company a presence in European markets, Thompson said: "It's something Sappi's management would have taken into consideration."

On Friday afternoon Sappi was trading down 4.71% at 2&nsbp730c/share.

Broker consensus - according to data supplied by McGregor BFA - has Sappi on "sell".

- Fin24.com