Petroquest Energy Inc. (NYSE: PQ) recently decided to shrink its share count by performing a reverse split and those tweaked shares will begin trading today. The idea behind reverse splitting the shares is to enable the company regain compliance for continued listing on NYSE. Every four shares of Petroquest are being replaced by a single share with the same value as four shares before the reverse split transaction combined.
The board of Petroquest Energy Inc. (NYSE: PQ) got the final shareholder approval to go ahead with the 4-for-1 reverse split during the recent shareholder annual meeting. Before the shareholder approval of the split, the board had proposed a reverse split in the range of 1-for-2 to 1-for-8. Shareholders favored the 1-for-4 split.
Impact on outstanding shares
Following the 1-for-4 reverse split, Petroquest’s outstanding shares will shrink to 17.6 million shares down from 70.5 million shares before the split. However, the management clarified that the proportionate voting rights will not be affected by the reverse split.
Petroquest Energy Inc. (NYSE: PQ) said that it will not issue fractional shares in connection with the reverse split. As such, shareholders whose holdings are not evenly division by four will have their fractional shares rounded up to the nearest whole share.
Who’s helping with the split transaction?
Petroquest tapped American Stock Transfer & Trust Company, LLC as the transfer agent for the reverse split. Therefore, shareholders whose holding are in certified form will receive a letter from the transfer agent for instructions.
1Q2016 earnings for Petroquest Energy Inc. (NYSE: PQ)
Petroquest Energy Inc. (NYSE: PQ) appears to be battling an array of challenges triggered by the fallout in commodity prices. Besides the efforts to regain NYSE listing compliance by performing a reverse split of shares, the company is also struggling with losses.
For 1Q2016, it posted EPS loss of $0.58, but the figure was a little bit better than EPS loss of $1.89 in the corresponding quarter in 2015. Nevertheless, Petroquest’s expenses mounted as general and administrative costs rose to $8.6 million compared to $5.3 million in the year ago quarter.