Tower Semiconductor is planning a reverse share split to comply with Nasdaq listing requirements, yesterday calling a shareholders meeting for July 26 to approve the change.
TowerJazz, as the integrated circuit maker styles itself, is cross-listed on Nasdaq and the Tel Aviv Stock Exchange. Its shares need to be valued at over $1 each to remain listed on the small-cap Nasdaq Capital Market, but the stock has been trading in the Big Apple at under $1 since early last August (although it briefly rose to exactly $1 on May 1 ).
This elicited a warning from Nasdaq in September that the stock would be delisted from trading permanently if its price wasn't adjusted to comply with its minimum trading value within a year. On Monday the stock closed at 79 cents after dipping as low as 74 cents last week.
The company didn't specify the ratio at which it intends to perform the reverse split. It could be anywhere from 25 to 1 at the high end, to as low as 8 to 1. But it is expected to be completed at a ratio of around 10 to 1, meaning the number of regular shares would be reduced by a factor of 10 and the share price would inversely increase tenfold.
Although Tower shares must be valued at over $1 each to remain listed on the Nasdaq Capital Market, the company aspires to move trading of its stock to the Nasdaq Global Market where the minimum price is $4 a share. Market operators claim that U.S. institutional investors rarely pay any heed to stocks trading at under $5 per share.
At the July shareholders meeting at its offices in Migdal Ha'emek, Tower will submit two other technical issues for approval: increasing the company's authorized share capital - amending its articles of association accordingly, and approving another amendment to its articles of association, authorizing the issuance of preferred shares redeemable for up to NIS 4 million.
In Tel Aviv the stock dropped 2.6% yesterday amid heavy volume, closing at NIS 3.08 per share.
