The board of directors at Saga Communications have set one minute before midnight Wednesday as the effective time for the previously announced one-for-four reverse stock split. Saga’s stock will trade on the NYSE Thursday on a split-adjusted basis, presumably at four times the Wednesday closing price.
The one-for-four reverse split ratio applies equally to the company’s publicly traded Class A stock and the non-traded Class B stock held by CEO Ed Christian. Thus, the reverse split will reduce Saga’s issued and outstanding shares of common stock from approximately 14,426,119 shares of Class A and 2,402,338 shares of Class B to approximately 3,606,530 shares of Class A and 600,585 shares of Class B.
Saga has retained its transfer agent, BNY Mellon Shareowner Services, to act as exchange agent for the reverse stock split. Shareowner Services will manage the exchange of old pre-reverse stock split shares for new post-split shares. People who old actual share certificates will receive information about how to exchange them for new post-split certificates. Most people hold shares in brokerage accounts and will receive notice of the reverse split from their brokers.
In lieu of issuing fractional shares, Saga will round up a fractional share to one whole share in the event the stockholder would be entitled to receive less than one whole share as a result of the reverse stock split.
RBR/TVBR observation: As we’ve noted before, reverse splits can be dangerous, sometimes launching a new stock price free-fall. Saga’s board, however, appears to be handling this move better than others we’ve seen over the years. Most importantly, they took action before there was a sense of desperation. Saga’s stock had not yet closed below a dollar per share and the reverse split will move it much further from that slippery slope. Also, the board has been open and transparent with investors, announcing plans for the reverse split weeks before implementing it and explaining their reasoning in making the move.