DEF 14C: Finance of America Companies Inc. Announces 10:1 Reverse Stock Split to Regain NYSE Compliance

Finance of America Companies Inc. will implement a 10:1 reverse stock split of its Class A Common Stock to increase its per-share trading price and regain compliance with NYSE listing standards.

Summary

• Finance of America Companies Inc. has approved an amendment to its Amended and Restated Certificate of Incorporation to effect a reverse stock split of its Class A Common Stock at a ratio of 10:1.
• The reverse stock split aims to increase the per-share trading price of the Class A Common Stock to meet the NYSE's continued listing standards, which require a minimum average closing price of $1.00 over a consecutive 30 trading-day period.
• The company received a notice from the NYSE on February 12, 2024, indicating non-compliance with this standard.
• The reverse stock split was approved by stockholders holding a majority (approximately 69.8%) of the voting power of the outstanding shares of capital stock as of June 11, 2024.
• The action will become effective 20 calendar days after the mailing of the definitive Information Statement to stockholders, expected on or about June 27, 2024, with an anticipated effective date of July 25, 2024.
• Following the reverse stock split, the number of outstanding Class A Common Stock shares will decrease, but the authorized number of shares will remain unchanged, potentially increasing the number of authorized but unissued shares.
• Stockholders will receive cash in lieu of fractional shares, and the company's transfer agent will handle the aggregation and sale of these fractional shares.
• The company's Board of Directors retains the right to abandon the reverse stock split if it is no longer deemed in the best interests of the company and its stockholders.

Sentiment

Score: 6

Explanation: The document is primarily factual and procedural, outlining the reverse stock split. While the intention is positive (regaining NYSE compliance), there are inherent risks and uncertainties associated with the action, leading to a neutral sentiment.

Positives

• The reverse stock split is expected to increase the per-share trading price of the Class A Common Stock, potentially making it more attractive to institutional investors.
• Regaining compliance with NYSE listing standards can improve investor confidence and market perception.
• The increased number of authorized but unissued shares provides greater flexibility for future financings, joint ventures, and acquisitions.
• The reverse stock split will not affect the registration of the Class A Common Stock under the Exchange Act or the listing on the NYSE.

Negatives

• There is no guarantee that the reverse stock split will increase the stock price or maintain it at a higher level.
• The reverse stock split may decrease the liquidity of the Class A Common Stock and result in higher transaction costs, especially for odd lots.
• The reverse stock split could have an anti-takeover effect by increasing the proportion of unissued authorized shares to issued shares.
• The per share trading price of the Class A Common Stock may decrease due to factors unrelated to the Reverse Stock Split, including the company's future performance.

Risks

• The reverse stock split may not increase the stock price as intended, and other factors like financial results and market conditions could adversely affect the price.
• Decreased liquidity and higher transaction costs for odd lots could negatively impact some stockholders.
• The potential anti-takeover effect could deter beneficial transactions for stockholders.
• The Board has the right to abandon the Reverse Stock Split if it determines that the Reverse Stock Split is no longer in the best interests of the Company and its stockholders.

Future Outlook

The company expects the reverse stock split to increase the per-share trading price of its Class A Common Stock and believes it may make the stock more attractive to a broader range of investors. The Board may abandon the Reverse Stock Split if it determines that the Reverse Stock Split is no longer in the best interests of the Company and its stockholders.

Industry Context

Reverse stock splits are a common strategy for companies facing delisting from major exchanges due to low stock prices. Other companies in similar situations may consider this approach to regain compliance and improve investor perception. However, the success of a reverse stock split depends on various factors, including the company's underlying financial performance and market conditions.

Comparison to Industry Standards

• Reverse stock splits are a relatively common corporate action, particularly for companies facing delisting from exchanges like the NYSE or NASDAQ.
• Companies like Ocugen Inc. and Cyren Ltd. have recently implemented reverse stock splits to regain compliance with listing requirements.
• The success of a reverse stock split in maintaining listing and improving stock price is varied, with some companies experiencing sustained gains while others see only a temporary effect.
• Compared to other methods of regaining compliance, such as raising capital or improving financial performance, a reverse stock split is often seen as a quicker, though potentially less sustainable, solution.

Stakeholder Impact

• Stockholders will experience a reduction in the number of shares they own, but their proportional ownership will remain the same (excluding fractional shares).
• The reverse stock split aims to improve the company's standing with institutional investors.
• Employees with stock options or equity grants will see adjustments to their holdings to reflect the reverse stock split.
• The company's ability to attract and retain talent may be affected by the perceived success of the reverse stock split.

Next Steps

• The company will mail the definitive Information Statement to stockholders on or about June 27, 2024.
• The Certificate of Amendment will be filed with the Secretary of State of the State of Delaware, potentially as early as the 20th day after the Information Statement is mailed.
• The company expects to issue a press release announcing the Effective Time at least ten days in advance.
• The transfer agent will handle the aggregation and sale of fractional shares, with stockholders receiving cash payments.
• FoA Equity is expected to take corresponding action to approve a reverse split of FoA Units.

Key Dates

Keywords

reverse stock split, NYSE compliance, Class A Common Stock, Finance of America, stock split, listing standards, stock price