Shares in Coote Industrial Ltd have bucked the broad downward trend of the market, jumping over 30 per cent in morning trade on a please explain note from the Australian Securities Exchange.
Maddington-based Coote was today responding to the ASX's query over the dramatic fall of its share price from 90 cents on October 7 to 29c at the time of the query.
In a statement, Coote said it was not aware of any information that would cause its share price to drop, however did suggest it could be in response to the sale of locomotives and wagons to private company Greentrains, as disclosed in its annual report.
"Greentrains is in the process of securing finance, in order to provide payment for the locomotives and wagons, Coote being the recipient of those funds," the company said.
"Greentrains and Coote Industrial are working cooperatively towards resolving the financing and when the appropriate approvals are in place, the Company, will immediately provide further advice to the market."
Coote added that its subsidiary Gemco Rail completed the refurbishment and sale of the locomotives during the last financial year.
"This transaction for Coote Industrial signaled significant progress towards its objective of becoming a major participant in the rolling stock services market," the company said.
"All of the locomotives and wagons purchased by Greentrains are now in use by various rail operators including Coote Industrial's subsidiary, South Spur Rail Services (SSRS).
"These assets are retained on a dry lease basis and those being used by SSRS are employed in short haul, port shuttles, infrastructure projects, hook & pull and other subcontract services under term contracts generally of 3 or more years which underpin 90% of SSRS FY09 revenue.
Shares in Coote today surged 10.5c to 40c at 12:19 AEDT after falling 29 per cent yesterday.
