Tags:
Journalism of Courage
Faced with the danger of delisting from the Nasdaq Stock Market for trading below the one dollar mark, Satyam Infoway Limited Sify decided to go for a reverse split which will automatically boost the price of the company8217;s stock. The company on Saturday announced that its board of directors has approved a one-for-four reverse split of the company8217;s American Depositary Shares ADSs. Consequently, the holders of Sify8217;s ADSs as at the close of business on September 23, 2002 will be entitled to one ADS for four ADSs held. The last day on which the ADSs will trade on a pre-ratio adjustment basis is Monday, according to a company press release. The adjustment in the ADS ratio will be effective commencing with the opening of trading on Tuesday, September 24, 2002. 8220;As the number of ADS will come down, Sify share price will go up. The capital in terms of ADS will fall8230; this8217;s a gimmick to remain listed on Nasdaq,8221; said an analyst.
The company8217;s equity shares, which are not publicly traded, will not be split. Consequently, after the change in ratio is completed, one ADS will represent one underlying equity share. As of June 30, 2002, Satyam Infoway had 23,202,176 equity shares and 23,733,612 ADSs outstanding. Upon completion of the ADS split, the number of outstanding ADSs will decrease to 5,933,403. This is being done to meet the minimum bid price requirements of the Nasdaq National Market. For continued listing on Nasdaq, the minimum bid price requirement is 1.
In fact, in the last 52 weeks its ADS price ranged between 3.19 and 0.37, after Satyam Computers announced its intention to divest its stake in Sify and the market talk following that, that various companies including AOL, Reliance and Tatas were keen to pick up Satyam Computers8217; stake. In a recent filing with the Securities and Exchange Commission, the company said that: 8220;Even if we adjust our equity share to ADS ratio, we do not know whether we will be able to maintain our Nasdaq National Market listing.8221;
