Trinity Biotech Plc Announces Plan to Implement ADS Ratio Change
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Insights
The decision by Trinity Biotech Plc to adjust the ADS ratio is a strategic financial maneuver aimed at addressing compliance issues with Nasdaq's minimum bid price requirement. By consolidating shares through a reverse split, the company is effectively increasing the trading price of its ADS, which may help it meet the $1.00 minimum threshold. This is a common tactic employed by companies facing delisting risks due to stock price depreciation.
From an investor's perspective, while the nominal value of shares will increase, the actual market capitalization remains unchanged. The immediate effect is purely cosmetic, as the intrinsic value of the company does not alter. However, the psychological impact on investors can be significant, potentially making the stock more attractive to institutional investors and funds that have mandates against investing in stocks below a certain price point. It's important to note that the reverse split does not guarantee a long-term price increase and may be followed by a decline if the underlying fundamentals of the company do not improve.
The effort to broaden the investor base by Trinity Biotech Plc reflects an understanding of market psychology and the barriers that low-priced stocks face. Stocks trading under $1.00 are often perceived as less credible or more speculative, which can deter certain investors. By increasing the price per ADS, the company may become more palatable to a wider range of investors, including those who are restricted from investing in stocks below certain price levels by policy.
Historical data suggests that reverse stock splits can result in an initial uptick in investor interest, as the stock appears more 'respectable' and may meet the criteria for inclusion in broader indices or investment portfolios. However, the long-term success of such a move is contingent upon the company's performance and whether it can capitalize on the temporary increase in visibility and investor confidence to drive fundamental growth.
Trinity Biotech Plc's change in the ADS ratio is a procedure compliant with SEC regulations, provided the company follows the proper disclosure and procedural guidelines. The mandatory exchange of old ADSs for new ones will be handled by The Bank of New York Mellon, which acts as the depositary. This process is typical of reverse splits and is legally structured to ensure fairness and transparency.
For holders of fractional shares, the process of aggregating and selling these shares is a standard practice designed to avoid the logistical issues of issuing fractional ADSs. The cash proceeds distribution reflects a fair and equitable treatment of shareholders, as the company cannot issue fractions of an ADS. Shareholders should be aware that this process might result in taxable events, depending on individual circumstances and jurisdictions.
DUBLIN, Ireland, Feb. 13, 2024 (GLOBE NEWSWIRE) -- Trinity Biotech Plc.(NASDAQ: TRIB) (the “Company”) today announced that it plans to change the ratio of the American depositary shares (“ADSs”) representing its Class A ordinary shares from one (1) ADS representing four (4) Class A ordinary share to one (1) ADS representing twenty (20) Class A ordinary shares.
For Trinity Biotech Plc ADS holders, the change in the ADS ratio will have the same effect as a one-for-five reverse ADS split and is intended to i) enable the Company to regain compliance with the
No fractional new ADSs will be issued in connection with the change in the ADS ratio. Instead, fractional entitlements to new ADSs will be aggregated and sold by the Depositary and the net cash proceeds from the sale of the fractional ADS entitlements (after deduction of fees, taxes and expenses) will be distributed to the applicable ADS holders by the Depositary.
As a result of the change in the ADS ratio, the ADS price is expected to increase proportionally, although the Company can give no assurance that the ADS price after the change in the ADS ratio will be equal to or greater than five times the ADS price before the change.
About Trinity Biotech Plc
Trinity Biotech develops, acquires, manufactures and markets diagnostic systems, including both reagents and instrumentation, for the point-of-care and clinical laboratory segments of the diagnostic market. The products are used to detect infectious diseases and to quantify the level of Haemoglobin A1c and other chemistry parameters in serum, plasma and whole blood. Trinity Biotech sells direct in the United States, Germany, France and the U.K. and through a network of international distributors and strategic partners in over 75 countries worldwide. For further information, please see the Company's website: www.trinitybiotech.com.
Forward Looking Statements
This release includes statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”), including but not limited to statements related to Trinity Biotech’s cash position, financial resources and potential for future growth, market acceptance and penetration of new or planned product offerings, and future recurring revenues and results of operations. Trinity Biotech claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterised by the terms “may,” “believes,” “projects,” “expects,” “anticipates,” or words of similar import, and do not reflect historical facts. Specific forward-looking statements contained in this presentation may be affected by risks and uncertainties, including, but not limited to, our ability to capitalize on our purchase of the assets of Waveform, our continued listing on the Nasdaq Stock Market, our ability to achieve profitable operations in the future, the impact of the spread of COVID-19 and its variants, potential excess inventory levels and inventory imbalances at the company’s distributors, losses or system failures with respect to Trinity Biotech’s facilities or manufacturing operations, the effect of exchange rate fluctuations on international operations, fluctuations in quarterly operating results, dependence on suppliers, the market acceptance of Trinity Biotech’s products and services, the continuing development of its products, required government approvals, risks associated with manufacturing and distributing its products on a commercial scale free of defects, risks related to the introduction of new instruments manufactured by third parties, risks associated with competing in the human diagnostic market, risks related to the protection of Trinity Biotech’s intellectual property or claims of infringement of intellectual property asserted by third parties and risks related to condition of the United States economy and other risks detailed under “Risk Factors” in Trinity Biotech’s annual report on Form 20-F for the fiscal year ended December 31, 2022 and Trinity Biotech’s other periodic reports filed from time to time with the United States Securities and Exchange Commission. Forward-looking statements speak only as of the date the statements were made. Trinity Biotech does not undertake and specifically disclaims any obligation to update any forward-looking statements.
| Contact: | Trinity Biotech plc Des Fitzgerald +353-1-2769800 | Eric Ribner LifeSci Advisors, LLC +1-646 -751-4363 E-mail: investorrelations@trinitybiotech.com | ||
FAQ
What is the reason behind Trinity Biotech Plc.'s (TRIB) change in the ADS ratio?
When will the change in the ADS ratio for Trinity Biotech Plc. (TRIB) be effective?
How will Trinity Biotech Plc. (TRIB) implement the change in the ADS ratio?
What will happen to fractional entitlements to new ADSs for Trinity Biotech Plc. (TRIB) shareholders?
Will the ADS price for Trinity Biotech Plc. (TRIB) increase after the change in the ADS ratio?
