IT Tech Packaging Sets 1-for-40 Reverse Stock Split; Effective Date Conflicts

IT Tech Packaging (NYSE American: ITP) will carry out a 1-for-40 reverse stock split, the company said in an 8-K filed Nov. 12.

The Baoding, China-based paper products maker said its board approved the split under Nevada law, which allows a board to reduce authorized and outstanding shares without a stockholder vote. The 8-K says the split is anticipated to be effective as of the open of trading on Nov. 23. The attached press release gives Nov. 20 as the effective date and says shares are expected to begin trading on a split-adjusted basis on Nov. 23, subject to NYSE American's approval. The two documents do not reconcile the effective date.

Share count and authorized shares

The number of outstanding shares will fall from about 19,965,420 to about 499,136, subject to adjustment for rounding. Authorized common stock will drop from 50,000,000 shares to 1,250,000 shares.

Each holder's share count will be divided by 40 and rounded up to the nearest whole share. Holders who would otherwise receive a fraction of a share will receive one whole share, so no fractional shares will be issued and no cash will be paid in lieu. The company said each holder's percentage ownership and voting power will remain unchanged, apart from minor effects from the fractional-share rounding.

Reason for the split

The company said the split is primarily meant to regain compliance with NYSE American continued listing standards tied to the low price per share of its common stock. The ticker remains ITP. The filing does not give a new CUSIP.

What holders need to do

Stockholders holding shares in electronic form at brokerage firms do not need to take any action, because the change will be reflected automatically in their accounts. Holders of paper certificates may send them to the transfer agent, Empire Stock Transfer, which will issue new certificates reflecting the split. The filing does not give a record date.

In October, the company filed an 8-K reporting a notice that it had failed to meet an NYSE American listing standard.