Scorpio Tankers is to carry out a one-for-10 reverse stock split as it looks to bolster investor interest in the company.
The US-listed shipowner said the move was approved at a special meeting of shareholders on Tuesday.
The reverse stock split will take effect as of the opening of trading on 18 January, it said in a statement.
The number of outstanding common shares will be reduced from around 513.9m shares to about 51.4m shares.
“The purpose for seeking shareholder approval to effect the reverse stock split was to increase the market price of the company’s common shares,” Scorpio said.
It added that it believes that such a move will “improve the marketability and liquidity of the shares” and will encourage interest and trading in the stock.
TradeWinds first reported that Scorpio Tankers was considering a potential reverse shares split in the middle of December 2018.
Speaking at a company investor day, president Robert Bugbee, said t he “sweet spot” in the stock price is between $10 and $20, as it is for many stocks.
Scorpio currently trades around the $2 mark, meaning it has a ways to go to reach even the low rung of that ideal range.
It is obvious, Bugbee noted, that Scorpio is under no regulatory pressure to effect a split, as has been the case with several shipowners who carried out reverse splits to push their shares above $1 and retain their exchange listings.
Bugbee added that Scorpio had canvassed “key investors” who he said support the reverse-split initiative.
“We’re opening up the range of people who are able to invest in our stock,” with the prospective split, Bugbee said.
“There are many funds who can’t invest in a stock that is trading under $10, and then there are other issues below $5.”
