Ethyl Corp. said last week that it will ask shareholders to approve a reverse one-for-five stock split aimed at increasing the stocks attractiveness to investors.
A company official said the proposal was not in response to a warning late last year that the stock would be taken off the New York Stock Exchange if its price did not increase. After Ethyls stock closed at less than $1 per share for 30 consecutive days, the exchange informed the company in December that it would delist the stock if the average price did not climb back above that level.
It doesnt have anything to do with that exactly, because weve moved well above a dollar since the start of the year, Vice President and Chief Financial Officer David Fiorenza said Monday. There is some sentiment to get the price completely away from that level.
The Richmond additive makers stock has been on a general upward trend in 2002. It began the year at approximately 90 cents and climbed above $1.40 before falling back below $1.20.
The reverse split proposal will be put to shareholder vote at the companys June 4 meeting. Fiorenza said Ethyls directors believe that increasing the price of the stock will enlarge the pool of investors who consider buying it.
There is a group of people that simply dont trade stock once the price drops below five dollars, he said. There are also people who believe, unscientifically, that it suggests theres a problem with a company if its stock is in the one dollar range. The thought is that making this change will reduce the number of investors who simply rule the stock out.
Ethyl also announced last week that it had reached agreements with lenders to extend the due date of its debt facility. The debt, originally due in August, is now due next March. Fiorenza said management plans to seek further extension before that time.