Monday, May 20, 2024

CineMedia National, like AMC, plans reverse split to boost stock price – Deadline

Theater advertising firm National CineMedia announced a special meeting of shareholders to vote on a reverse stock split — a move that boosts a company’s stock price — as it risks being delisted from the Nasdaq market and operates through a voluntary reorganization of Chapter 11.

The company, which was founded and is largely owned by the country’s biggest exhibitors, announced its plans in an SEC filing that, however, did not yet include a date for the 2023 meeting, or the terms of the reverse split. Those details will come, with “the exact ratio to be determined by the Company’s Board in its discretion,” the filing said.

The stock, which has been in penny stock territory for many months, fell more than 10% today to close at 31 cents. They rose (3%) to 32 cents in late trading.

AMC Entertainment, which had also seen volatile trading, announced plans for a ten-for-one reverse stock split late last year. Reverse splits increase the price of a share and decrease the total number of shares outstanding. They are usually made by companies seeking to avoid delisting or improve their standing with investors. A number of shares, in this case not yet specified, are combined and reclassified into one share.

Stock splits, the reverse maneuver, are common, recent examples include Apple and Amazon, and generally a sign of progress as the stock price rises sharply.

National CineMedia was notified by Nasdaq last October that it had failed to meet minimum listing requirements (staying below $1 a share for 30 consecutive days) and was recently given until July 26 to comply.

The company was also involved in the ongoing bankruptcy of Cineworld, part of NCMI’s partial owner Regal, which wanted to exit or change the parties’ long-term contract as part of its Chapter 11. NCMI sued but the case was dismissed by bankruptcy court judge of Regal. The companies reached a new, comprehensive agreement earlier this month. It will be part of Cineworld’s eventual restructuring plan when it is approved by the judge, likely this summer.

NCMI’s statement today said “Regal has agreed to timely vote its equity shares in the company in favor of the reverse stock split.”

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