Ascena seeks to avoid delisting with reverse stock split
Mahwah, New Jersey-based Ascena Retail Group, Inc.’s board of directors approved a 1-for-20 reverse stock split on Thursday, in an effort to comply with the Nasdaq’s minimum share price and stave off delisting.
Coming into effect at 5:30 PM on December 18, 2019, the reverse stock split saw the number of both issued and outstanding shares of common stock in Ascena reduce from approximately 199.44 million to around 9.97 million.
Correspondingly, the maximum authorized number of shares of common stock in the company was also reduced to 18 million.
According to Ascena, the operation has affected all of its stockholders uniformly and does not alter anyone’s percentage interest in the company’s common stock, except in the case of stockholders entitled to fractional shares.
Indeed, no fractional shares have been issued as a result of the reverse stock split. Ascena’s transfer agent has instead aggregated all fractional shares and will sell them as soon as is practicable. Stockholders who would have been entitled to fractional shares will then receive a cash payment in an amount equal to their respective pro rata share of the sale’s total proceeds.
Ascena, which owns the Ann Taylor, Loft, Dressbarn and Lane Bryant banners, among others, has been at risk of being delisted from the Nasdaq for a while now. The exchange requires companies to maintain a minimum share price of $1.00, a condition that the company will regain compliance with if it can keep above this lower limit for a minimum of ten consecutive business days prior to January 27, 2020.
Following the reverse stock split, Ascena shares were priced at $8.55 a piece at start of trading on Thursday.
The company has introduced a number of cost-cutting measures over the last year as it has worked towards getting its finances back on track.
The retail group sold its Maurices brand in May and plans to complete the wind-down of Dressbarn before the end of December, effectively bringing an end to its value segment.
Thanks to these and other measures, Ascena was able to reduce its selling, general and administrative expenses by 9% in the first quarter ended November 2, 2019, swinging to a surprise quarterly profit of $32 million despite a 3.1% decline in sales totaling $1.30 billion.
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