Medalist Diversified REIT, Inc. Announces Reverse Stock Split and Forward Stock Split
Medalist Diversified REIT (NASDAQ: MDRR) announced a one-for-ten reverse stock split and a five-for-one forward stock split. Both splits will take effect on July 2, 2024, with trading on a split-adjusted basis starting July 3, 2024, under the new CUSIP number 58403P402. The reverse split will convert every ten shares into one, followed by the forward split which will convert every one share into five. These adjustments will not change any stockholder's ownership percentage, except for minor changes due to cash payments in place of fractional shares. Shareholders will be informed of their new stock ownership details by VStock Transfer , the company's transfer agent.
- Stock Splits are designed to maintain shareholder value.
- No change in ownership percentage for shareholders.
- Reverse stock split may indicate financial troubles.
- Potential short-term market instability.
Insights
The adoption of a one-for-ten reverse stock split followed by a five-for-one forward stock split by Medalist Diversified REIT, Inc. is a significant structural change. While these stock splits don't impact the ownership percentage of current shareholders, they are aimed at reshaping the stock's price and potentially making it more attractive. By initially performing a reverse stock split, the company reduces the number of outstanding shares, which is often employed to increase the stock price per share, potentially avoiding delisting from Nasdaq due to low trading prices. This is followed by a forward split to increase the number of shares, likely to enhance liquidity and make the shares more affordable for retail investors.
For retail investors, this maneuver could indicate the company's strategic move to stabilize its stock price and enhance marketability. While this might not inherently change the company's market capitalization, it could affect the perception of the stock's value and accessibility. Investors should monitor how these adjustments impact trading volumes and stock performance post-split.
In the short term, there could be increased volatility as the market adjusts to the new share structure, but long-term implications would rely on the company's underlying performance and market conditions.
This double split strategy by Medalist Diversified REIT, Inc. is an interesting approach to managing its stock's market presence. The reverse stock split effectively consolidates shares, which can often be interpreted as a move to meet minimum share price requirements for listing or to make the stock appear less volatile. Following this with a forward stock split helps to increase the number of shares and lower the trading price per share, making the stock more accessible to a broader base of retail investors without altering the inherent value of the company.
For investors, it's key to understand that these stock splits do not change the fundamental value or market cap of the company. Instead, they can influence market perception and trading behavior. A higher price post-reverse split can signal confidence and stability, while a subsequent lower price post-forward split can attract more trades and potentially increase liquidity. It's important to consider how these moves align with broader market trends and the company's financial health.
The Reverse Stock Split is expected to take effect as of 5:00 p.m. Eastern Time, on July 2, 2024. Accordingly, at such time, every ten issued and outstanding shares of Common Stock will be converted into one share of Common Stock. The Forward Stock Split is expected to take effect immediately following the Reverse Stock Split as of 5:01 p.m. Eastern Time, on July 2, 2024. Accordingly, at such time, every one issued and outstanding share of Common Stock will be converted into five shares of Common Stock. Corresponding adjustments to the outstanding common units of the Company’s operating partnership, Medalist Diversified Holdings, L.P. will become effective at the respective times.
The Common Stock is expected to begin trading on The Nasdaq Capital Market (“Nasdaq”) on a Stock Split-adjusted basis beginning on July 3, 2024, under the new CUSIP number 58403P402.
No fractional shares will be issued in connection with the Reverse Stock Split. Instead, each stockholder that would hold fractional shares as a result of the Reverse Stock Split will be entitled to receive, in lieu of such fractional shares, cash in an amount equal to the applicable fraction multiplied by the closing price of the Common Stock on Nasdaq on July 2, 2024 (as adjusted for the Reverse Stock Split). The Stock Splits will apply to all of the outstanding shares of Common Stock and therefore will not affect any stockholder’s ownership percentage of shares of Common Stock, except for de minimis changes resulting from the payment of cash in lieu of fractional shares with respect to the Reverse Stock Split. Stockholders of record will receive information from VStock Transfer LLC, the Company’s transfer agent, regarding their stock ownership following the Stock Splits and, if applicable, payments of cash in lieu of fractional shares with respect to the Reverse Stock Split. Stockholders who hold their shares in brokerage accounts or in “street name” are not required to take any action in connection with the Stock Splits.
Forward-Looking Statements
This press release contains statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward-looking statements are not historical and are typically identified by such words as “believe,” “expect,” “anticipate,” “intend,” “estimate, “may,” “will,” “should” and “could” and include statements about the potential Stock Splits and the impact, if any, of the Stock Splits on the Company and the trading price of the Common Stock. Forward-looking statements are based upon the Company’s present expectations but are not guarantees or assurances as to future developments or results. Factors that may cause actual developments or results to differ from those reflected in forward-looking statements include, without limitation, those included in the Company’s most recent Annual Report on Form 10-K and in the Company’s other filings with the Securities and Exchange Commission. Investors should not place undue reliance upon forward-looking statements. The Company disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes and new developments except as required by law or regulation.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240620079723/en/
Brent Winn
Medalist Diversified REIT, Inc.
bwinn@medalistreit.com
Source: Medalist Diversified REIT, Inc.
FAQ
What is the reverse stock split for Medalist Diversified REIT (MDRR)?
When will the reverse stock split for MDRR take effect?
What is the forward stock split for Medalist Diversified REIT (MDRR)?
When will the forward stock split for MDRR take effect?
What is the new CUSIP number for MDRR after the stock splits?
Will the stock splits affect my ownership percentage in MDRR?
How will fractional shares be handled in MDRR's reverse stock split?
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