RCN Corp. is asking for shareholder approval of a reverse split of its common
stock -- a move that would increase its stock price and avert a delisting from
the NASDAQ small-cap market exchange.
In a document filed with the Securities and Exchange Commission April 4, RCN
said it had received notice Sept. 25 from NASDAQ that its stock has traded below
the minimum $1-per-share price needed for continued listing on the exchange.
However, because RCN was able to keep its market capitalization above $50
million, it has received a 180-day extension from NASDAQ until Sept. 22 to get
its share price above $1 for 10 consecutive days.
RCN stock was priced at 71 cents per share in afternoon trading Monday, down
4 cents each.
The Princeton, N.J.-based telecommunications-service provider did not detail
the terms of the split, stating that it would depend on the price of its stock
for the five days prior to the split.
RCN did not reveal the ratio of the reverse split, but it said its share
price would climb to $5 apiece immediately after the split. Shareholders will
get to vote on the proposal at RCN's annual meeting May 8 in Princeton, N.J.
In addition, RCN said it would ask for shareholder approval to increase the
number of outstanding common shares from 300 million to 500 million.
In the SEC document, RCN said the increase would give it greater flexibility
to issue stock for general corporate purposes such as additional stock splits,
raising equity capital, acquisitions, establishing strategic relationships with
other companies and repurchasing debt.