Bombardier (BBD.B) is planning a reverse stock split.
The Montreal-based business-jet maker is seeking shareholder approval to change its articles of incorporation so that it can consolidate the company's Class A and B shares at a ratio between 10-for-1 and 30-for-1.
The measure requires a shareholder vote at Bombardier's annual meeting on May 5.
In a news release, Bombardier said a share consolidation would allow it to cut down its number of common shares to a level that's on par with other companies that have a similar market capitalization.
The company said that the precise share ratio consolidation would be determined at a later date, and at the discretion of its board of directors.
As of the close of trading last Friday (March 25), Bombardier had a market capitalization of $3.6 billion. It has almost 2.1 billion Class B shares and 308.7 million Class A multiple-voting shares, according to its website.
Since last September, Bombardier’s Class B shares have lost nearly one-third of their value on the Toronto Stock Exchange (TSX) and now trade at $1.50 per share, putting them in penny stock territory.
Reverse stock splits are an artificial way for companies to raise the value of their share price. They do not change the underlying fundamentals of an organization.
