The board of semiconductor-based components and satellite solar panel developer Emcore has approved a one-for-four reverse stock split as it seeks to raise the value of the company’s common shares.
The reverse stock split is due to become effective on…
The board of semiconductor-based components and satellite solar panel developer Emcore has approved a one-for-four reverse stock split as it seeks to raise the value of the company’s common shares.
The reverse stock split is due to become effective on 15 February 2012 and will see the company reduce the number of its issued and outstanding shares from approximately 94 million to 23.5 million. Emcore stated that proportional adjustments will also be made to any Emcore options, warrants and other securities that entitle their holders to purchase shares.
The plan to reduce the number of Emcore shares was first mooted in May 2011 and at the company’s annual meeting on 14 June its shareholders approved a reverse stock split in the range of 2:1 to 10:1. The size of split was then determined by the board on 25 January 2012.
Emcore gave a number of reasons as to why it needs to undertake the split including ‘increasing institutional investor interest in and ownership of the company’s common stock’, ‘reducing certain costs, including Nasdaq listing fees’ and ‘improving the company’s ability to maintain long-term compliance with the listing requirements of Nasdaq’, such as its US$1 minimum bid price requirement.
It is this latter point that is likely to be the key driver to the reverse stock split decision given the historical decline of Emcore’s share price over the past four years. The company’s stock reached a peak of US$15.10 back in February 2008 but suffered a steep decline throughout that year falling to less than US$1 at the start of 2009. Since then the stock has stubbornly hovered around the US$1 mark bar a brief revival in the first half of 2011. As of 1 February 2012, Emcore’s share price was US$1.28.
