Steel Partners Holdings L.P. Announces Extension of Effective Date for Reverse/Forward Unit Split
- None.
- None.
Insights
The announcement of Steel Partners Holdings L.P.'s Reverse/Forward Unit Split is a strategic financial maneuver that merits a closer look from an investment perspective. Such corporate actions can have significant implications for market perception, liquidity and the company's capital structure. The Reverse Unit Split effectively consolidates units, reducing the number of outstanding units, which could potentially increase the per-unit price and make the stock more appealing to institutional investors. Following this, the Forward Unit Split will increase the number of units back to their original count, maintaining the same equity value for current investors but making the units more accessible to retail investors due to a lower price per unit.
It is crucial to note that no fractional units will be issued and cash will be paid out instead. This detail is particularly important for investors holding fewer than 12,500 units, as they will be cashed out at the volume-weighted average price, which could be seen as a forced liquidation at a potentially unfavorable price. This could lead to dissatisfaction among smaller unitholders. Additionally, the exclusion of certain employee-held units from the Reverse/Forward Unit Split may indicate an attempt to retain employee investment in the company, but it also raises questions about equitable treatment of all unitholders.
Investors should monitor the volume-weighted average price prior to the effective date, as it will impact the cash payout for those holding fractional units. Furthermore, the company's right to abandon, modify, or extend the Reverse/Forward Unit Split introduces an element of uncertainty, which could affect investor sentiment and the stock's volatility leading up to the effective date.
Reverse and forward stock splits are not everyday occurrences and tend to draw significant attention from the market. The timing and rationale behind such actions are often scrutinized for underlying motives, such as an attempt to adjust the trading range of a company's units to attract a different class of investors or to meet stock exchange listing requirements. In the case of Steel Partners Holdings L.P., the Reverse/Forward Unit Split may be a strategic move to recalibrate its market presence.
Market reaction to such events can be mixed. While some investors may see the Reverse Unit Split as a positive step towards stabilizing the stock price at a higher level, others may view it as a cosmetic change that does not address underlying business challenges. The immediate Forward Unit Split that follows could be perceived as an effort to maintain a broad unitholder base, which is often a sign of a company valuing its retail investor community.
The impact on the stock's liquidity post-split will be an important factor to watch. Increased liquidity can result in tighter bid-ask spreads and potentially more efficient price discovery. However, the market will also be assessing the administrative handling of the split, including the cash payments for fractional shares, which could introduce temporary distortions in trading volumes and price.
From a legal standpoint, the execution of a Reverse/Forward Unit Split involves a series of regulatory and compliance considerations. Steel Partners Holdings L.P. must adhere to NYSE listing requirements and securities laws governing corporate actions. The company's disclosure of the potential to abandon, modify, or extend the Reverse/Forward Unit Split is a standard practice to maintain flexibility and compliance with changing market conditions or regulatory requirements.
The exclusion of certain employee-held units from the Reverse/Forward Unit Split is a legal decision that must be governed by the company's partnership agreement and applicable securities laws. Such exclusions are typically subject to scrutiny to ensure they do not violate anti-discrimination provisions or create an unfair advantage.
Lastly, the payment of cash in lieu of fractional units is a common practice in such corporate actions, designed to avoid the complexities and potential legal issues associated with issuing fractional shares. However, the method for calculating the cash payout—based on the volume-weighted average price—must be transparent and fair to all unitholders to prevent potential legal disputes.
The Company Common Units are expected to begin trading on a split-adjusted basis when the market opens on January 12, 2024. Certain holders of the Company’s Common Units who are employees will have their Company Common Units excluded from the Reverse/Forward Unit Split. If the Company further extends the Effective Date to a later date, the Company will disclose such extension via press release and/or a current report on Form 8-K prior to the Effective Date.
No fractional units will be issued in connection with the Reverse/Forward Unit Split. Instead, the Company will pay cash (without interest) to any unitholder who would be entitled to receive a fractional unit as a result of the Reverse/Forward Unit Split. Unitholders who hold fewer than 12,500 units immediately prior to the Reverse Unit Split will be paid in cash (without interest) an amount equal to such number of Company Common Units held multiplied by volume-weighted average price for the ten consecutive trading days immediately preceding the effective date of the Reverse/Forward Unit Split.
The Company’s transfer agent, Equiniti Trust Company, LLC, will serve as exchange and paying agent for the Reverse/Forward Unit Split. Registered unitholders holding pre-split Company Common Units electronically in book-entry form are not required to take any action to receive post-split units. Unitholders owning Common Units via a broker, bank, trust or other nominee will have their positions automatically adjusted to reflect the Reverse/Forward Unit Split, subject to such broker’s particular processes, and will not be required to take any action in connection with the Reverse/Forward Unit Split.
About Steel Partners Holdings L.P.
Steel Partners Holdings L.P. is a diversified global holding company that owns and operates businesses and has significant interests in leading companies in various industries, including diversified industrial products, energy, defense, supply chain management and logistics, banking and youth sports.
Forward-Looking Statements
This press release contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that reflect the Company’s current expectations and projections about its future results, performance, prospects and opportunities. The Company identifies these forward-looking statements by using words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate," and similar expressions. These forward-looking statements are only predictions based upon the Company's current expectations and projections about future events, and are based on information currently available to the Company and are subject to risks, uncertainties, and other factors that could cause its actual results, performance, prospects, or opportunities in 2024 and beyond to differ materially from those expressed in, or implied by, these forward-looking statements. These factors include, without limitation, risk factors detailed from time to time in filings the Company makes with the Securities and Exchange Commission, including the Company's Form 10-K for the year ended December 31, 2022 and subsequent quarterly reports on Form 10-Q and annual reports on Form 10-K. Any forward-looking statement made in this press release speaks only as of the date hereof, and investors should not rely upon forward-looking statements as predictions of future events. Except as otherwise required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances, or any other reason.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240108757480/en/
Investor Relations
Jennifer Golembeske
212-520-2300
jgolembeske@steelpartners.com
Source: Steel Partners Holdings L.P.
FAQ
What is the announcement made by Steel Partners Holdings L.P. (NYSE: SPLP)?
When is the Reverse Unit Split expected to become effective?
When is the Forward Unit Split expected to become effective?
What will happen to the Company Common Units on January 12, 2024?
What will the Company do if it further extends the Effective Date?
