For the second time in five years, Ocwen Financial has found itself in violation of the New York Stock Exchange’s rules.
Back in 2015, the NYSE threatened to delist Ocwen after the nonbank failed to file its annual report on time. And now, Ocwen is in more trouble with the NYSE after the company’s stock fell below $1 and stayed there for a month.
NYSE rules stipulate that the average closing price of a company’s stock must be at least $1 per share over a consecutive 30 trading-day period.
Ocwen’s stock, meanwhile, hasn’t closed at $1 per share or more since March 13, 2020, when it closed trading at $1.09.
Since then, Ocwen’s stock has fallen, as many company’s stocks have, in the wake of the current economic crisis. But with Ocwen remaining below $1 for a month, the NYSE notified the nonbank last week that it was not in compliance with the exchange’s listing rules.
According to the nonbank, Ocwen has six months get back into compliance with the NYSE’s price rules. Ocwen would become compliant again if on the last trading day of a month or on the last day of the six-month window, Ocwen has a closing price of at least $1 and an average closing share price of at least $1 over a 30 trading-day period.
Put simply, Ocwen needs to be trading firmly back above $1 or the company risks being kicked off the NYSE.
In a statement, the company states that it is considering several alternatives to boost its stock price, including a reverse stock split.
“The company is considering implementing a reverse stock split, which may potentially increase its stock price and therefore could potentially enable the company to regain compliance with the NYSE’s minimum share price requirement,” Ocwen said in a statement. “The company also intends to reduce the number of its authorized shares of common stock by the same proportion as the ratio chosen for the reverse stock split.”
Ocwen said that it plans to present the reverse stock split plan to shareholders during its annual meeting in May, at which time, the shareholders will vote on whether the split is an advisable course of action.
But the company states that even if it doesn’t get the support of its shareholders, it may still move forward with the reverse stock split if it’s in the best interest of the company.
“The board intends to take into account the results of the advisory vote as well as changing market conditions and other developments which may impact the company’s stock price in order to make a determination with respect to the best course of action to pursue in order to regain compliance with the NYSE’s minimum share price requirement,” Ocwen said. “If the members of the board believe, due to changing circumstances or otherwise, that it is in the best interests of the company and its shareholders to implement the reverse stock split even if not approved on an advisory basis, the Board reserves the discretion to do so.”
During the six-month period, Ocwen will remain on the NYSE. As of 2:48pm Eastern on Tuesday, the company’s stock was trading at $0.42, down nearly 9% for the day.
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