The price of Allied Farmers shares is predicted to fall below 10c when trading starts this morning, with some brokers predicting a floor of 5c a share this week.
More than 1.97 billion 20c shares were issued at 6pm on Friday to the former Hanover Finance and United Finance investor as part of a deal in which Allied takes over the assets of the failed finance companies.
Craigs Investment Partners broker Chris Timms is anticipating the share price to be "savaged" as the former finance company investor tries to recover as much money as quickly as it can.
There was a "fair chance" the price would go below 10c.
The volume of shares being traded from today was likely to soar as people looked to exit the company, he said.
However, there could be some short-term delays in some investors quitting their shares.
While the shares were issued on Friday, there could be delays in getting the common shareholder number (CSN) and faster identification number (FIN) sent out.
People wanting to sell also had to provide brokers with photo identification, Mr Timms said.
"Even if these are the only shares they hold, we still require photo identification and FIN numbers.
I don't expect people to have all the details when shares start trading [on] Monday."
That would not be a problem for someone who already had a trading account and they could end up better advantaged by selling early in the week than others who had to wait, he said.
With this week being a short week on the markets, there would be extra pressure on the price as a "huge amount" of people tried to sell off shares before Christmas.
Asked who the buyers would be for those shares, Mr Timms said he had no idea, but they would need to be long-term investors comfortable with risk.
The shares were trading around 14c on Friday and Mr Timms questioned people buying them at that price when they were expected to be much cheaper this week.
Forsyth Barr broker Peter Young was bracing himself for a lot of inquiries this morning from former debenture holders wanting to sell the stock.
Many of the new shareholders had been fixed interest investors and this was their first exposure to equity.
He believed many of the new shareholders would have their CSN and FIN identification arrive in the mail this morning.
"There is such a lot of new shares on issue, which will highly dilute existing holdings and drive the price down."
Allied Farmers faced a tough few weeks as it considered how to best treat the assets it took over from Hanover, Mr Young said.
Mr Timms said because Allied had done the deal with equity rather than debt, the Hanover assets would bolster the rural servicing firm's assets.
This was another example where the share price would not reflect the value of the company.
"Some people will have no affinity with this company.
All they will be looking for is to extract the best possible money they can.
The share price and the company performance will be disconnected," he said.
