Shareholders of Permian Basin producer Laredo Petroleum Inc. voted in favor of a reverse stock split on May 14, a move expected to boost its share price and avoid delisting from the New York Stock Exchange (NYSE).
A 1-for-20 reverse stock split ratio of Laredo shares currently outstanding is expected to become effective June 1. As a result, Laredo said the number of authorized shares of its common stock will decrease to 22.5 million from 450 million.
“The reverse stock split is intended to increase the market price of the company’s common stock in order to regain compliance with the NYSE’s continued listing standards,” Laredo said in a May 14 company release.
Laredo received a delisting warning by the NYSE in late March that its stock was not meeting certain listing requirements.
The company’s stock price, which has fallen roughly more than 70% so far this year, closed at $0.83 per share on May 14. The NYSE requires a stock’s average trading price to be above $1 per share over a 30-day period.
Shareholders of Laredo voted at its annual meeting held on May 14 for approval of the reverse stock split at a ratio ranging from 1-for-5 to 1-for-20, the latter of which was approved by the Laredo board following the meeting.
Other U.S. shale producers have taken similar measures this year in hopes of boosting its share price to avoid delisting, including Callon Petroleum Co. and Chesapeake Energy Corp.
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