Pier 1 Imports is asking its shareholders to approve a reverse stock split of as much as 1-for-20 shares.
The proposal, contained in the Fort Worth home furnishings retailer's proxy filing before its June 19 annual meeting, would give the company's board of directors discretion in determining timing and ratio of the split.
The company is recommending ratios of 1-for-5, or 1-for-10 or 1-for-20 of its 85 million shares of common stock outstanding and 500 million authorized shares. The effect of such a move would be to raise the stock price.
Boosting its stock price is key to keeping the company listed on the New York Stock Exchange. The company was notified on Jan. 11 that it was in danger of being dropped because its stock has traded mostly below $1 a share since December.
"We believe that the reverse stock split, by increasing our stock price, will make our common stock more attractive to a broader range of institutional and other investors," Pier 1 said in its proxy. Many investor groups have policies that prohibit or discourage portfolio managers from investing in stocks trading under $1 a share.
