Today’s the day that Cumulus Media shareholders will cast their approval — or reject — the company’s proposed 1-for-8 reverse stock split.
Cumulus shareholders or their proxies will be casting their vote at a 9 a.m. meeting in Atlanta on whether or not the financially beleaguered company should engineer a reverse split of its Class A common stock, Class B common stock and Class C common stock – each at a ratio of one new share in exchange for eight current shares.
The plan, if successful, would reduce the number of authorized Class A shares from 750,000,000 to 93,750,000; of Class B shares from 600,000,000 to 75,000,000; and Class C shares from 644,871 to 80,609.
The move would make Cumulus shares move out of the dreaded “Penny Stock” category.
CMLS shares have been drifting between 31 cents and 36 cents per share over the last months; Cumulus’ Class A shares moved from the NASDAQ Global Select Market to the NASDAQ Capital Market on May 3. Without the reverse stock split, the Class A shares would face delisting for failing to meet the minimum share value of $1.
The majority of shareholders are expected to vote by proxy. However, the vote could be determined by either Crestview Radio Investors, which holds 29.4% of the voting power, or former Cumulus CEO Lew Dickey Jr.
Dickey, who relinquished his CEO duties in October 2015, holds 13.5% of the company’s voting control and remains Cumulus’ vice chairman.
Cumulus President/CEO Mary Berner holds less than 1% of the company’s voting power.
Only shareholders of Class A common stock and Class C common stock as of the close of business on Sept. 9, 2016 are participating in the vote, with Class A and Class C shareholders are voting together as a single class. However, each outstanding share of Class A common stock is entitled to one vote, while each outstanding share of Class C common stock is entitled to ten votes.
In the event there are not sufficient votes at the time of the special meeting to approve the reverse stock split, Cumulus will adjourn the meeting in order to solicit additional proxies.
Today’s vote is occurring on the Jewish Day of Atonement, Yom Kippur.