8-K: Wheeler REIT Implements One-For-Five Reverse Stock Split to Regain Nasdaq Compliance

Wheeler Real Estate Investment Trust has finalized a one-for-five reverse stock split, effective June 27, 2024, to address Nasdaq listing requirements.

Summary

• Wheeler Real Estate Investment Trust (WHLR) has implemented a one-for-five reverse stock split of its common stock, effective June 27, 2024, at 5:00 PM Eastern Time.
• The reverse stock split will reduce the number of outstanding shares and adjust the par value of the common stock from $0.05 to $0.01 per share.
• The company abandoned a previously planned one-for-six reverse stock split after discussions with Nasdaq.
• The common stock will begin trading on a split-adjusted basis on June 28, 2024, under a new CUSIP number (963025861).
• Fractional shares resulting from the reverse split will be paid out in cash based on the closing price of the common stock on June 27, 2024.
• The reverse stock split will also affect the conversion rates of the company's convertible securities, including the 7.00% subordinated convertible notes due 2031, Series B Convertible Preferred Stock, and Series D Cumulative Convertible Preferred Stock.
• The number of shares authorized under the company's incentive plans will also be adjusted to reflect the reverse stock split.
• The company anticipates that the reverse stock split will result in non-compliance with Nasdaq's Publicly Held Shares Rule and expects to receive a notification from Nasdaq requiring a plan to regain compliance.
• The company also faces potential delisting if it fails to meet the minimum bid price requirement of $1.00 per share and has effected reverse stock splits with a cumulative ratio of more than 250 shares to one over the prior two-year period.

Sentiment

Score: 3

Explanation: The document indicates a negative situation with the company facing non-compliance with Nasdaq listing rules and potential delisting. The reverse stock split is a reactive measure to address these issues, not a sign of positive growth or performance.

Positives

• The reverse stock split is a step to address Nasdaq listing requirements.
• The company is taking action to avoid potential delisting.

Negatives

• The reverse stock split will result in non-compliance with Nasdaq's Publicly Held Shares Rule.
• The company faces potential delisting if it fails to meet the minimum bid price requirement.
• The reverse stock split will reduce the number of outstanding shares, which may negatively impact liquidity.

Risks

• The company may not be able to regain compliance with Nasdaq's Publicly Held Shares Rule.
• The company may be delisted from Nasdaq if it fails to meet the minimum bid price requirement.
• The reverse stock split could negatively impact investor sentiment and the stock price.
• The company's ability to raise capital may be hindered by the reverse stock split and potential delisting.

Future Outlook

The company anticipates receiving a letter from Nasdaq regarding non-compliance with the Publicly Held Shares Rule and will submit a plan to regain compliance. The company also faces potential delisting if it fails to meet the minimum bid price requirement.

Management Comments

• The Board of Directors approved the change to a one-for-five reverse stock split after discussions with Nasdaq.
• The company is taking steps to address Nasdaq listing requirements.

Industry Context

Reverse stock splits are often used by companies to increase their stock price and avoid delisting from exchanges. This action is not uncommon for companies facing compliance issues with listing requirements.

Comparison to Industry Standards

• Other REITs facing similar challenges have also implemented reverse stock splits to maintain their listing status.
• Companies like CBL Properties and Washington Prime Group have previously used reverse stock splits as a tool to regain compliance with exchange listing requirements.
• The one-for-five ratio is a common ratio for reverse stock splits, although some companies have used higher or lower ratios depending on their specific circumstances.

Stakeholder Impact

• Shareholders will experience a reduction in the number of shares they own, but their relative ownership percentage will remain the same, except for de minimis changes resulting from the payment of cash in lieu of fractional shares.
• Shareholders may experience a decrease in the value of their investment if the company is unable to regain compliance with Nasdaq listing requirements.
• Holders of convertible securities will see adjustments to their conversion rates.

Next Steps

• The company will submit a plan to Nasdaq to regain compliance with the Publicly Held Shares Rule.
• The company will monitor its stock price to ensure it meets the minimum bid price requirement.
• The company will disclose its receipt of any letter from Nasdaq on a Current Report on Form 8-K.

Key Dates

Keywords

reverse stock split, Nasdaq compliance, common stock, convertible securities, delisting, WHLR, Wheeler REIT, par value, publicly held shares, minimum bid price