We had several inquiries from readers at the end of last week, about the changes in Billabong’s stock price and temporary irregularities in trading.
The changes have to do with a measure that was just approved by Billabong shareholders that consolidates the company’s shares on a five to one basis. For example, if one owns 500 shares they will be consolidated into 100 shares.
The consolidation means the value of each share will increase, however the aggregate value of all shares held by an individual shareholder is not expected to be affected by the consolidation.
Billabong wanted the consolidation to make their shares more attractive to institutional investors, some of which have rules against investing in companies whose stock prices are under $1.
After the consolidation, the company will go from having 990,370,034 shares on issue to approximately 198,074,007.
The consolidation will have no effect on the percentage interest of each individual shareholder in the company, Billabong said. Executive incentive rights and executive performance shares will be consolidated on the same basis.
The consolidation process started on Nov. 26 and as it proceeds, the company’s stock will trade under a different stock symbol, BBGDA.
On Dec. 8, the stock will resume trading under the old code, BBG.
