Airline’s deputy chair revealed a $200 million plan to fly between capital cities to a newspaper, instead of the market. ASIC is not happy.
The post REX told off for blabbing to media rather than ASX appeared first on The Motley Fool Australia. –
The corporate regulator has slammed airline Regional Express Holdings Ltd (ASX: REX) for “continuous disclosure failures” to shareholders and the ASX.
The Australian Securities and Investments Commission (ASIC) on Wednesday slapped a one-year ban on the company from issuing reduced-content prospectuses to raise money on the ASX.
Regional Express must now produce a full prospectus to ask investors for further cash.
The corporate regulator didn’t mince words in explaining the prohibition.
“ASIC’s decision was based on REX’s failure to disclose to the market that it was considering the feasibility of commencing domestic operations, such as flying to capital cities, in addition to its regional operations,” stated the commission.
“This information was first released publicly to a journalist on 11 May 2020.”
What did Rex do exactly?
The incident refers to Rex deputy chair John Sharp’s interview with the Australian Financial Review, where he revealed a new $200 million plan to start flying between Sydney, Melbourne and Brisbane.
Up until then, Regional Express had flown between regional and rural destinations and never directly competed with the likes of Qantas Airways Limited (ASX: QAN) and Virgin Australia.
After the publication of that article, Regional Express was forced to place a trading halt on its shares. The next day it made an official announcement to the ASX revealing the $200 million initiative.
The Motley Fool has requested comment from Regional Express.
ASIC stated that the use of a reduced-disclosure prospectus was “a privilege” conditional on legal compliance, including meeting market disclosure responsibilities.
Ironically the reprimand failed to dampen investor enthusiasm for Rex shares.
The Rex share price was up 9.14% at 2.30pm AEDT on Wednesday, in response to the company’s receipt of a High Capacity Air Operator’s Certificate from the Civil Aviation Safety Authority.
This means the airline is another step closer to competing in the lucrative capital city routes, which it plans to do from 1 March.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
- Why Beacon Lighting, Flight Centre, REX, & Resolute Mining are shooting higher
- Why the Regional Express (ASX:REX) share price is soaring 10% higher today
- Qantas (ASX:QAN) budget flights to exceed pre-COVID levels by March
- Why the Regional Express (ASX:REX) share price is flying higher today
- Regional Express (ASX:REX) share price soars to 13-year high
Motley Fool contributor Tony Yoo owns shares of Qantas Airways Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
The post REX told off for blabbing to media rather than ASX appeared first on The Motley Fool Australia.