AMSC issues reverse stock split
PHOTO/MATT VOLPINI
AMSC of Devens, whose stock has been trading at less than $1 per share for four months, issued a 1-for-10 reverse stock split Wednesday after approval last week by shareholders, the company announced.
The manufacturer of wind and power grid equipment, formerly known as American Superconductor, saw its stock price plunge since it reached a high of nearly $37 in November 2010, when the company's trade secrets were allegedly stolen by its largest customer, Sinovel Wind Group of China.
AMSC’s board cut the number of shares in half, from 150 million to 75 million, effective with Wednesday’s trading. The stock, which trades on the Nasdaq exchange, closed Tuesday at 70 cents. Because of the reverse split, it was to open trading Wednesday at $7.01.
AMSC received a letter from Nasdaq in January informing the company that it was not in compliance with the listing’s $1 minimum stock price. The company was given 180 days to come back into compliance.
According to the investor website Investopedia, reverse stock splits are often seen as negative because companies use them to prop up a stock’s value if it falls below $1 and runs the risk of being delisted on the Nasdaq exchange.
In its most recent quarterly report, AMSC said it lost $6.4 million and projected losses of less than $6 million in the current quarter. The company said it has enough money to fund operations through the end of 2015.
Sinovel had also refused to honor an extensive contract, costing AMSC $158.5 million when Sinovel refused to pay for past shipments or accept new ones. AMSC later brought the company to court for $450 million after Sinovel allegedly used a portion of the software code AMSC had developed for its wind turbines. The case remains in the Chinese court system.
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