Rite Aid approves reversal stock split of common stock
CAMP HILL , Pa. Rite Aid Friday morning announced today that its board of directors has approved a reverse stock split of the company’s common stock, though the exact ratio has yet to be determined.
Rite Aid was notified by the NYSE on Oct. 16 that its average closing share price of its common stock had fallen below $1 per share over 30 consecutive trading days. Subject to NYSE rules, Rite Aid has six months from the date of the notice to regain compliance with the minimum share price rule.
During that time, Rite Aid’s common stock continues to be listed on the NYSE and trade as usual. Rite Aid is in compliance with all other NYSE listing rules.
Besides regaining compliance on the NYSE exchange floor, the company believes a reverse stock split would also benefit stockholders because a higher price will make Rite Aid common stock more attractive to a broader range of institutional and other investors.
The reverse stock split is subject to stockholder approval, and once approved, Rite Aid’s board will select a reverse stock split ratio of either 1-for-10, 1-for-15 or 1-for-20 so that, depending on the ratio chosen, either10, 15 or 20 shares of issued and outstanding common stock will convert into one share of common stock. The price of each common share would increase by the same ratio so that a stockholder would have fewer but higher priced shares, keeping the total investment the same when the market opens on the date a split becomes effective. A reverse stock split would not have any impact on the voting and other rights of stockholders. Rite Aid said a reverse stock split will have no impact on its business operations or any of its credit facilities.
The company plans to hold a special meeting of stockholders and complete the reverse stock split in December. The time, date, location and other details regarding the special meeting will be communicated to stockholders at a later date via proxy material which will be filed with, and subject to the review by the Securities and Exchange Commission. Rite Aid's Board has preliminarily set Oct. 28 as the record date for stockholders entitled to receive a proxy statement and vote at the special meeting.
Per NYSE rules, Rite Aid will be in compliance with the share price listing rule if at the end of the six month cure period it has at least a $1.00 share price and has maintained at least a $1.00 average closing share price over the preceding 30 consecutive trading days.