YRC Worldwide is moving toward a reverse stock split to boost the per share value of its common stock and avoid being kicked off the Nasdaq exchange.
The $4.3 billion trucking operator plans a reverse stock split that will range from one-for-50 to one-for-300, reducing the number of shares by that ratio.
The news sent the company’s share value up, but only by pennies. The stock peaked at 7.5 cents a share Friday before dropping to about 6 cents Monday.
YRC Worldwide is appealing a delisting threat from Nasdaq, which requires companies on its board to maintain a per share value above $1. The stock hasn’t traded above $1 since July.
The company informed shareholders of its plans in a proxy statement for its 2011 annual general meeting filed with the Securities and Exchange Commission. The board of directors will determine the ratio of the reverse stock split, which shareholders must approve The Oct. 6 filing did not set a date for the meeting.
YRC Worldwide’s stock has been on a long downhill slide over the past few years as the company restructured its finances to reduce its debt and avoid bankruptcy. A debt-for-equity swap with bondholders in 2010 led to a massive infusion of new stock and a one-to-25 reverse stock split that sent its share value up to $6.
The stock’s value eroded, however, and plunged once the company implemented its latest financial restructuring, creating more than billion new common shares.
The $500 million restructuring helped YRC Worldwide reduce its long-term debt and locked in labor concessions from the Teamsters through 2015. However, YRC’s lending group and its Teamster employees own 97.5 percent of its 1.9 billion shares, leaving original shareholders with 2.5 percent of the stock.