TSX Venture Exchange rules out mass culling of ‘zombies’ – by Peter Koven (Financial Post – April 6, 2016)

http://business.financialpost.com/

Despite the hopes of some critics, a culling of the TSX Venture Exchange is not about to happen. Venture president John McCoach confirmed that while the exchange is looking at every possible option to “revitalize” its business model, a mass delisting has been ruled out.

“We did look at that very seriously,” he said in an interview. “We think there’s room for making our continued listings standards simpler. But as far as moving the bar up or down, we think it’s in about the right place.”

The Venture has simply been mauled by the commodity price collapse and lack of financing for junior resource firms. The S&P/TSX Venture Composite Index, despite rising 11 per cent this year, is down an astonishing 83 per cent from its 2007 peak.

But the performance of the index masks the exchange’s much bigger problem. Hundreds of companies have run out of cash and stopped doing anything to create value for shareholders as capital for upstart resource plays has dried up over the past few years. These inactive firms are derisively known as “zombies.”

Critics say the zombies are a real problem, complaining that they distract attention from the active companies and drag down the reputation of Canada’s capital markets.

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