Alcoa Inc (NYSE:AA) reported that it intends to commence a reverse stock split of its common stock at 1 for 3 ratio with a proportionate decline in the authorized shares count of its common stock. This plan is anticipated to positively impact the per share trading price of Alco shares, which may further enhance liquidity and assist its trading.
Alcoa has planned a shareholder meeting in October 2016 to get approval of the proposed reverse stock split plan and reduction of authorized share count. The nod for both proposals will come only after the company gets affirmative vote in the meeting. Alcoa has submitted an initial proxy statement pertaining the shareholder meeting with the U.S. SEC.
After the execution of reverse stock split process, every 3 shares of Alcoa will be converted into 1 share of its common stock. The company does not project releasing fractional shares as a part of the reverse stock split process. Shareholders entitled to get fractional share(s) will obtain cash payments in exchange of such shares. In case, the shareholders approves reverse stock split process, the authorized shares count of Alcoa common stock would reduce from the existing count of 1.8 billion to 600 million.
The proposed reverse stock split process will not have any impact on the voting rights or proportionate equity interests of common stock holders, subject to the disbursement of fractional shares. Shareholders of record as of the close of operations on August 3, 2016 will be authorized to vote at the planned meeting.
Alcoa plans to effect the reduction of authorized share count and implement reverse stock split prior to the previously reported separation of the firm. The company is a large-cap firm with a capitalization of $13.89 billion. It has irregular free cash flow and is steadying now with the steady aluminum prices and the downstream operations is growing.