DEF: Crown LNG Holdings Seeks Shareholder Approval for Reverse Stock Split to Avoid Nasdaq Delisting

Crown LNG Holdings Limited is soliciting shareholder approval for a reverse share split with a ratio between 1-for-60 and 1-for-120 to regain compliance with Nasdaq's listing requirements and prevent delisting.

Summary

• Crown LNG Holdings Limited (the Company) is holding a General Meeting of Shareholders on July 1, 2025, at 11:00 a.m. Eastern Standard Time, as a hybrid in-person and virtual meeting.
• The primary proposal for shareholder approval is a special resolution to amend the Company's share capital to effect a reverse share split (the Reverse Share Split) of its ordinary shares.
• The proposed ratio for the Reverse Share Split is in the range of 1 for 60 to 1 for 120, with the exact ratio to be determined by the Company's Board of Directors following the General Meeting.
• The main purpose of the Reverse Share Split is to maintain the listing of the Company's ordinary shares on the Nasdaq Capital Market, addressing current non-compliance issues.
• As of the Record Date (June 5, 2025), the Company had 489,417,994 ordinary shares of no par value in issue.
• The Board of Directors unanimously recommends a vote FOR the proposal, stating it is in the best interests of the Company and its shareholders.
• Shareholders of record as of June 5, 2025, are entitled to vote, with each ordinary share carrying one vote.
• The Company has engaged Laurel Hill Advisory Group, LLC as its proxy solicitation agent, with a base fee of $8,500 plus expenses.

Sentiment

Score: 3

Explanation: The document addresses significant negative issues (Nasdaq non-compliance, delisting threat, late filing) that necessitate a drastic corporate action (reverse stock split). While the proposed action aims to resolve these issues, the underlying situation is highly unfavorable, indicating a negative sentiment.

Positives

• The proposed reverse share split aims to enable the Company to regain compliance with Nasdaq listing rules, specifically the Minimum Bid Price Rule and the Low Priced Stock Rule, thereby preventing delisting.
• The Board's unanimous recommendation for the proposal indicates a unified approach to addressing the listing deficiencies.
• The flexibility in the reverse split ratio (1 for 60 to 1 for 120) allows the Board to adapt to market conditions and maximize anticipated benefits for shareholders.

Negatives

• The Company is currently non-compliant with Nasdaq Listing Rule 5550(a)(2) due to its closing bid price not being at least $1.00 per share (Nasdaq Minimum Bid Price Rule).
• The Company is non-compliant with Nasdaq Listing Rule 5810(c)(3)(A)(iii) as its securities had a closing bid price of $0.10 or less for ten consecutive trading days (Low Priced Stock Rule).
• The Company failed to timely file its Form 20-F for the period ended December 31, 2024, violating Nasdaq Listing Rule 5250(c)(1) (Filing Requirement).
• Failure to approve the proposal could result in material adverse consequences, including delisting from Nasdaq.
• Potential consequences of delisting include limited availability of market quotations, reduced liquidity, designation as a 'penny share' (requiring more stringent broker rules), limited news and analyst coverage, and decreased ability to issue additional securities or obtain financing.

Risks

• There is no assurance that the reverse share split will increase the market price of the Company's Ordinary Shares proportionately to the ratio, or that the price will not decrease to its pre-split level.
• The market price of Ordinary Shares may not exceed or remain in excess of $1.00 per share for a sustained period of time even after the split.
• The market price may decrease due to factors unrelated to the reverse share split, including future financial and operating performance.
• If the trading price declines after the split, the percentage decline as an absolute number and as a percentage of overall market capitalization may be greater than without the split.
• The liquidity of Ordinary Shares may be harmed by the implementation of the reverse share split due to the reduced number of shares in issue.
• Future issuance of additional Ordinary Shares will reduce current shareholders' percentage ownership interest and could dilute projected future earnings per share and book value per share.
• There is no assurance that the Company will ultimately regain compliance with all applicable Nasdaq listing requirements.
• Risks include not receiving shareholder approval for the proposal.
• Further delays in the filing of the Company's late periodic reports and restated financial statements.
• The discovery of additional information regarding the error identified in the Company's previously issued consolidated financial statements.
• The scope of the anticipated restatement of previously issued financial statements as a result of the error.
• The remediation by management and the Company's independent registered public accounting firm of identified material weaknesses in internal control over financial reporting.
• The Nasdaq Panel's determination following the Company's appeal of its delisting decision.
• The Nasdaq Panel's decision whether or not to grant the Company various extension periods following the submission of a hearing request to regain compliance with deficiencies.

Future Outlook

The Company's future outlook is focused on regaining and maintaining compliance with Nasdaq listing standards, primarily through the proposed reverse share split. The Board will determine the exact ratio of the split based on market conditions and the anticipated impact on share price and financing capabilities. The Company also aims to become current in its public reporting obligations, including the overdue Form 20-F. However, there is no assurance that these actions will ultimately lead to sustained compliance or prevent delisting.

Management Comments

• "The Board has determined that approval of the matters to be considered at the General Meeting is in the best interests of the Company and its shareholders."
• "For the reasons set forth in the proxy statement, the Board unanimously recommends a vote FOR each matter to be considered."
• "On behalf of the Board and the officers and employees of the Company, I would like to take this opportunity to thank you for your continued support." Swapan Kataria, Chief Executive Officer.

Industry Context

This announcement is specific to Crown LNG Holdings Limited's corporate governance and listing compliance issues. It does not provide broader insights into industry trends or competitive landscape, focusing solely on the Company's efforts to meet exchange requirements.

Corporate Governance

Legal Proceedings

• The Company is requesting a hearing to review the Nasdaq staff's determination to delist its securities from The Nasdaq Capital Market due to non-compliance with listing rules.

Stakeholder Impact

• Shareholders: Will experience a reduction in the number of shares held, with potential impact on share price, liquidity, and the ability to trade on Nasdaq. Fractional shares will be rounded up. Future share issuances could dilute their percentage ownership.
• Investment Professionals/Analysts: Will need to re-evaluate the Company's valuation and trading metrics post-split, and monitor its progress in regaining Nasdaq compliance.
• Regulatory Authorities (SEC/Nasdaq): The filing is a direct response to regulatory non-compliance, indicating ongoing scrutiny and the Company's efforts to meet mandated requirements.

Next Steps

• Shareholders are requested to vote on the reverse share split proposal at the General Meeting on July 1, 2025.
• If approved, the Board will determine the exact reverse share split ratio (between 1 for 60 and 1 for 120).
• The Company plans to issue a press release announcing the Effective Date of the Reverse Share Split.
• A copy of the special resolution amending the share capital will be filed with the registrar of companies in Jersey.
• The Company is requesting a hearing to review Nasdaq staff's determination to delist its securities.
• The Company needs to regain compliance with all applicable Nasdaq listing rules.
• The Company needs to become current in its public reporting obligations, including filing the overdue Form 20-F.
• Final voting results will be published in a current report on Form 6-K within four business days following the General Meeting.

Key Dates

Keywords

Crown LNG Holdings, Reverse Share Split, Stock Split, Nasdaq Listing, Delisting, Proxy Statement, Shareholder Meeting, Corporate Governance, SEC Filing, CGBS, Minimum Bid Price Rule, Low Priced Stock Rule