Delcath Systems, Inc. (NASDAQ:DCTH)
Delcath Systems, Inc. (NASDAQ:DCTH) poor run in the market continued after the Chief Executive Officer, Jennifer K. Simpson, issued a letter to stockholders. The stock continues to trade at all-time lows and the company has been hit with a delisting notice by the NASDAQ capital markets.
Shares of Delcath Systems, Inc. (NASDAQ:DCTH) continue to trade in a downtrend in a tight $0.10 – $0.11 trading range. The strength of the sell-off wave threatens to push the stock to its 52-week lows having dropped from highs of $3 a share in late 2016. In a bid to shore up the stock price, the company has proposed a reverse stock split that it hopes shareholders will approve at an upcoming AGM.
Reverse Stock Split Push
According to Simpson, approval of the proposed reverse stock-split will result in the extinguishment of a Note with a majority note holder. The transaction should also adjust the floor price of the remaining note with a minority note holder.
Delcath Systems, Inc. (NASDAQ:DCTH) is also banking on the reverse stock-split to solve the minimum bid requirement for the NASDAQ. Regaining compliance is crucial as listing in the exchange allows the company to gain access to a wide range of capital opportunities.
“Should the Company not obtain approval for a reverse stock split, it is likely that the Company will be delisted from NASDAQ. We believe remaining on the NASDAQ provides liquidity and other benefits to the Company and its investors,” Delcath Systems, Inc. (NASDAQ:DCTH) in a statement.
Delcath Systems, Inc. (NASDAQ:DCTH) has also reached an agreement with a majority Note holder of Convertible notes through which 90% of the outstanding debt is to be extinguished upon the approval of the reverse stock-split . The transaction should mitigate potential future dilution of the stock-split.
In addition to reducing the amounts of outstanding shares, the reverse stock-split should provide Delcath Systems, Inc. (NASDAQ:DCTH) with the flexibility to raise equity capital. The company hopes to raise money to fund its clinical development programs as well as finance its commercial efforts in Europe.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: Monica has an undergraduate degree in Accounting and an MBA she earned – with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.