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Why the Sundance Energy share price crashed 30% lower today

The worst performer on the All Ordinaries index on Wednesday has been the Sundance Energy Australia Ltd (ASX: SEA) share price.

Its shares sank as much as 30% lower to 18.2 cents at one stage following the release of a major announcement.

What did Sundance Energy announce?

This morning Sundance Energy announced its decision to re-domicile from Australia to the United States via a proposed scheme of arrangement.

This scheme of arrangement remains subject to shareholder, judicial and regulatory approvals, but if approved, the company will transfer its primary listing to the Nasdaq and cease to trade on the Australian share market.

The company’s board of directors advised that they unanimously recommend that Sundance shareholders vote in favour of the scheme of arrangement on the belief that the move could deliver certain benefits to the company and its shareholders.

This includes increasing awareness with a broader US investor pool, leading to the company being more fully valued over time by a greater number of investors who are familiar with unconventional oil and gas exploration and production companies.

In addition to this, it believes the move would give Sundance Energy access to lower-cost debt or equity capital in the US markets. This is because these markets are “larger and more diverse than Australian capital markets, thus enabling future growth to be financed at a lower cost.”

It also believes it will result in a simplified corporate structure. This is a positive for potential future merger, sale or acquisition transactions, which it feels may increase its attractiveness to potential merger partners, sellers or acquirers.

And finally, the switch to the Nasdaq will allow the company to streamline its business operations as the corporate structure would be aligned with the core of its business operations. Currently, almost all of its assets and management are in the United States.

The company has appointed an independent expert to determine whether the scheme is the best interests of shareholders. It expects this report to be ready early in October.

In the meantime, it appears that some shareholders are not keen on the company’s plan and have decided to hit the sell button today.

Also falling heavily on the All Ordinaries index on Wednesday have been the shares of Appen Ltd (ASX: APX) and iSignthis Ltd (ASX: ISX). Profit-taking appears to be weighing on these two tech shares, leading to them dropping 7.5% and 13%, respectively.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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