American Financial FOA (FOA), the leading U.S. reverse mortgage lender, has received shareholder approval for a 10-for-1 reverse stock split on the recommendation of its board of directors, a move aimed at boosting the company’s stock price. That’s according to a company filing with the U.S. Securities and Exchange Commission Securities and Exchange Commission (SEC) Reviewer house lineReverse Mortgage Daily (RMD).
A reverse stock split involves merging the shares available on the market into fewer, higher-priced shares. Facing the prospect of delisting New York Stock Exchange The company believed the move was necessary to support its stock price because it did not meet New York Stock Exchange listing standards, the filing showed.
RMD contacted FOA for comment on the move, but a spokesperson referred any questions back to the SEC filing.
“The reverse stock split is intended to increase the share price per share of our Class A common stock in order to regain compliance with the continued listing standards of the New York Stock Exchange,” the filing reads.
The company’s move was approved by shareholders, who hold nearly 70% of the voting rights of the company’s issued share capital. The company also detailed the reasoning behind the move later in the document.
“Our board of directors has determined that it is prudent and in the best interest of the company and our stockholders to reduce the number of shares of our Class A common stock outstanding, with the primary purpose of increasing the trading price per share of our Class A common stock. In order to satisfy the requirements of the New York Stock Exchange price standards for continued listing on the exchange,” the document reads.
The FOA hopes the move will have a significant impact, according to the documents.
“We expect that the reverse stock split will return the trading price of our Class A common stock to above $1.00 per share and, accordingly, we also believe that the reverse stock split may make our Class A common stock more attractive to a broader range of investors. is attractive.
Brokerage firms and institutional investors often have “internal policies and practices that either prohibit them from investing in penny stocks or tend to prevent individual brokers from recommending penny stocks to clients,” the FOA noted, adding that some of these policies “may result in The processing of penny stock trades is not economically attractive to brokers.
The Company recognizes that this move carries certain risks, including the possibility that expected results will not be achieved.
It said the outcome of the move “cannot be predicted with certainty” and the company cannot guarantee an increase in total market capitalization. There are other factors that could affect the final outcome of the move, including business performance and market realities.
The FOA first received communication from the NYSE in December 2023 that it did not meet the criteria for continued listing, and issued a second notification in February 2024. shares had a price of at least $1.00 during the trading day, but the price reached that threshold only eight times in 2024.
Earlier this month, the company implemented a round of layoffs that affected multiple levels of the organization, but it’s unclear how widespread those layoffs will be. At the same time, the company’s president Kristen Sieffert said that the company’s chief retail sales officer chose to voluntarily leave FOA.
Home Equity Conversion Mortgage (HECM) Endorsement Data Reverse Market Insights (RMI), FOA is the nation’s No. 1 lender, with 7,784 endorsements in the 12 months ended May 31, 2024.
The data does not include origins of proprietary reverse mortgages, but providers of those loans do not publicly share sales data for their private-label products.
