Precision Drilling (TSX: PD) (NYSE: PDS) announced after the bell last night that the company has received a notice from the New York Stock Exchange indicating that it is currently in non-compliance with the exchanges continued listing standards for its share price. As a result, the company announced that it is consideration a share consolidation, or reverse split, to rectify the situation.
As per listing standards for the New York Stock Exchange, all equities must maintain an average closing price of $1.00 or higher over a thirty day period. Those who do not maintain this compliance are at risk of being delisted by the exchange, which could have severe implications in the form of losing institutional investors.
After receiving the notice, the company has six months to regain compliance, which requires the firm to close above $1.00 on the last trading day of any month in the allotted time frame. The company also must maintain an average price above $1.00 for a duration of thirty days.
As a means of rectifying the situation, Precision Drilling has identified that it will consider all options to resolve the compliance issue, measures among which include a reverse stock split. The split would effectively reduce the outstanding share count of the company, bringing the price of the equity into compliance for listing requirements. While the firms listing on the TSX is not impacted by the threat of delisting, it would be impacted should a reverse split occur.
As of the time of writing, Precision Drilling has a reported 275,912,513 common shares outstanding as per TMX Money, and a market capitalization of $133 million. Based on the current trading price of $0.34 on the NYSE, the company would likely at minimum be required to conduct a 4 for 1 reverse split as a means of regaining compliance with listing standards.
Information for this briefing was found via Sedar and Precision Drilling. The author has no securities or affiliations with any of the mentioned securities. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
