CAMP HILL, Pa. Rite Aid stockholders approved a reverse split of the company’s common stock at a special stockholders meeting held Tuesday, the company announced Wednesday morning.
Stockholders also voted to reduce the number of authorized common shares.
According to the vote, Rite Aid’s board will be able to designate the split at a ratio of 1-for-10, 1-for-15 or 1-for-20, depending upon what would be most advantageous to the company, just before executing the split.
With almost 825 million of eligible votes cast, more than 92 percent of stockholders voted in favor of both proposals.
The objective of the reverse stock split is to ensure that Rite Aid regains compliance with the New York Stock Exchange share price listing rule and maintains its listing on the NYSE. Subject to NYSE rules, Rite Aid has until April 16 to regain compliance organically, in other words without executing a reverse stock split.
Rite Aid’s board currently expects to select the split ratio and effect the reverse stock split by the end of the company’s fiscal year, which is Feb. 28.
However, the exact timing for selection of the split ratio and the effective date of the split will be determined by Rite Aid’s board based upon “its evaluation as to when such action will be most advantageous to the company and its stockholders.”
A reverse stock split would reduce the total number of Rite Aid’s issued and outstanding common shares, resulting in an increase in price per share. Rite Aid believes that in addition to allowing Rite Aid to regain NYSE compliance, a reverse stock split would also benefit stockholders because a higher share price will make the stock more attractive to a broader range of investors, including institutional investors that shy away from investing in companies with stock prices hovering at or below $1 per share as a matter of common practice.