Alimco Financial Corporation (ALMC) announced today that its board of directors has approved a 1-for-10,000 share reverse stock split of its common stock (the “Reverse Split”) to be followed immediately by a 1,000-for-1 share forward stock split (together, the “Reverse/Forward Split”). The proposed Forward/Reverse Split has also been approved by written consent of stockholders holding a majority of outstanding shares of the company’s common stock.
When the proposed Forward/Reverse Split becomes effective, any record stockholder account holding less than 10,000 shares of common stock immediately prior to the effective time of the Reverse Split will receive, in lieu of a fractional share of common stock, a cash payment of $1.21 per share on a pre-split basis. The company estimates that the proposed Forward/Reverse Split will reduce the number of record account stockholders to less than 70.
The company believes that the benefits of the proposed Forward/Reverse Split include:
- The company will enjoy certain administrative, statutory and regulatory benefits from reducing the number of stockholders, including greatly diminishing the likelihood that the company could inadvertently become an SEC reporting company again. If that were to occur, the company would incur substantial additional expenses each year to comply with the Securities Exchange Act, the Sarbanes-Oxley Act, and related federal securities laws and regulations. Such compliance would also create an administrative burden for management.
- The transaction will allow stockholders with small holdings to liquidate their common stock without incurring any brokerage commissions or expenses and without the delay that might otherwise be experienced due to the usual low volume of trading in the company’s stock.
The company has filed a Notice of Company-Related Action with FINRA for the proposed Forward/Reverse Split. The proposed Forward/Reverse Split is subject to, among other things, obtaining notice from FINRA that it will process the transaction. The company’s board of directors has discretionary authority to abandon the proposed Reverse/Forward Split at any time before it becomes effective. Subject to those conditions, the company anticipates that the proposed Forward/Reverse Split will become effective on or after May 31, 2017.
Alan B. Howe