Hovnanian Enterprises, Inc. (NYSE: HOV) announced today the completion of a 1-for-25 reverse stock split of the company's outstanding and treasury shares of its Class A common stock and Class B common stock, together with a proportionate reduction in the number of authorized shares of each such class. The company was facing de-listing from the New York Stock Exchange due to the low levels of its share price.
Shares of HOV closed at $0.52 on Thursday. After the reverse split, the stock was up to $12.40 in extremely light pre-market trading Friday. It closed at $10.96, a decline of 20.29%.
The par value of the company's common stock was unchanged at $0.01 per share after the reverse stock split. The reverse stock split became effective at 12:01 am on March 29, 2019 and the company's shares of Class A common stock will begin trading on a split adjusted basis on the New York Stock Exchange ("NYSE") when the market opens on March 29, 2019 under the company's existing symbol "HOV."
The amendments to the company's certificate of incorporation effecting the reverse stock split and authorized share reduction were approved by the company's shareholders at the annual meeting of shareholders on March 19, 2019. The Board of Directors approved the reverse stock split at a 1-for-25 ratio also on March 19, 2019.
"The reverse stock split is primarily intended to increase the per share trading price of the company's Class A common stock to regain compliance with the minimum average closing price criteria set forth in the NYSE's Listed Company Manual. At the effective time of the reverse stock split, every 25 shares of the company's issued shares (including treasury shares) of common stock were converted to one share of common stock," the company stated in a release. "The reverse stock split will affect all stockholders uniformly and will not alter any stockholder's percentage ownership interest or proportionate voting power in the Company, except to the extent that the reverse stock split results in fractional shares. No fractional shares will be issued in connection with the reverse stock split. Stockholders who would otherwise be entitled to receive a fractional share will instead receive a cash payment."
Hovnanian's transfer agent, Computershare Inc., is acting as the exchange agent and transfer agent for the reverse stock split.