American FinancialThe leading lender in the reverse mortgage industry announced this week that its planned reverse stock split will proceed as scheduled on July 25.
The plan, initially announced last month, involves consolidating the company’s existing shares into a smaller number of higher-priced shares. Facing the prospect of delisting New York Stock Exchange (New York Stock Exchange) The company believes the move is necessary to support its price because it does not meet the exchange’s listing standards, according to its original 8-K filing with the NYSE. Securities and Exchange Commission (U.S. Securities and Exchange Commission).
“[E]”Excessive ten issued and outstanding shares of the Company’s Class A common stock will automatically be reclassified to one issued and outstanding share of the Company’s Class A common stock,” the new announcement explains. “A reverse stock split will not result in the issuance of fractional shares.”
FOA’s exchange agent does not issue fractional shares mainland stock transfer trust co. “Any such fractional shares will be aggregated and sold and the cash proceeds from such sales will be issued to stockholders on a pro rata basis in lieu of fractional shares.”
The company’s move has been approved by shareholders. They represent nearly 70% of the voting power of the company’s issued share capital, according to a June plan announcement.
“The primary purpose of the reverse stock split is to increase the trading price per share of American Financial’s Class A common stock to meet the price standards for continued listing on the New York Stock Exchange,” FOA reiterated in its effective date announcement.
FOA has been proactively taking steps to strengthen its financial position. In December 2023, the company received notice from the New York Stock Exchange that it did not meet the exchange’s continued listing standards, which require the stock price to remain above $1 during a given 30-day trading period. The FOA said it would return to compliance thereafter, but the NYSE issued a second notice in February 2024.
Earlier this month, the New York Stock Exchange took steps to begin delisting FOA’s warrants, which trade under the symbol “FOA.WS,” but Class A common stock trading under the symbol “FOA” will continue trade.
Last week, credit rating agencies Fitch announced that its FOA’s long-term issuer default rating (IDR) has been downgraded to ‘C’ from ‘CCC+’ after announcing a debt swap program aimed at hedging maturity risks beyond 2025.
According to an announcement and 8-K, FOA announced late last month that it has entered into an exchange offer agreement with certain noteholders that will create new secured debt that will be deducted from existing unsecured notes in 2025. Expires after the year expiration date. But Fitch said it believes there are other considerations at play.
credit rating agency Moody’s FOA was also assessed following the debt agreement and determined that its existing rating remains unchanged.
