Vista Alegre in reverse stock split move
Portugal’s world famous chinaware firm Vista Alegre is proposing a reverse stock split action to its shareholders.
The move from its board of directors comes as shares hit a nominal value of €0.08 per share, a figure unlikely to be sufficient for it to trade shares on the stock market.
The Vista Alegre company, which was founded in 1824 as a china and porcelain manufactory is today mostly owned by Visabeira which holds 94% of its capital.
There are a number of reasons why a company would carry out a reverse stock split action but it is usually to meet stock exchange listing requirements. An exchange generally specifies a minimum bid price for a stock to be listed. If the stock falls below this price it risks being delisted.
A company whose stock price has sharply declined over a number of years may have little choice but to undergo a reverse stock split to maintain its exchange listing.
The company. However, has justified its proposal on the grounds of a “high number of shares representative of its social capital which, in terms of liquidity, can mean that only small changes in quotations can mean significant percentage variations.”
Vista Alegre is going to regroup its shares from 10 to one which means that a batch of 10 shares at €0.08 is now worth one share at €0.80.
The company’s social capital is 1,524,091,463 shares with a nominal value of 0.08 euros. If approved the capital will represented by 152,409,146 shares at €0.80.