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Ocean Rig UDW Inc. (NASDAQ:ORIG) Craters after Court Verdict

Ocean Rig UDW Inc. (NASDAQ:ORIG)

Ocean Rig UDW Inc. (NASDAQ:ORIG)

Ocean Rig UDW Inc. (NASDAQ:ORIG) shares fell 47.89% after a U.S. bankruptcy court issued an order granting comity and ordering implementation of Cayman Islands Schemes of arrangement in the U.S. The Schemes affect the financial indebtedness of the company and its subsidiaries. Implementation of the schemes will result in the conversion of the firm’s $2.67 billion debt into distributable value.

Ocean Rig UDW Inc. (NASDAQ:ORIG) fell on huge volume after reiterating that the court verdict will not in any way affect its operations. The company also sought to avert a further slide of the stock by reiterating that creditors and vendors will receive their dues as they are not affected by the schemes.

Investors continue to push the stock lower amidst growing concerns over the impact of the ongoing restructuring. The stock is already down by more than 70% for the year as it continues to trade at multi-year lows.

Reverse Stock Split

In what is seen as an attempt by the company to shore up the stock price that continues to trade at all-time lows, Ocean Rig UDW Inc. (NASDAQ:ORIG) has announced a new reverse stock split. The company is to implement a 1-for-9,200 stock split, approved in April.

The reverse stock split is to come into effect on September 21, 2017 and will result in the conversion of 9,200 issued common stock into one share of common stock. No fractional shares will be allowed once the split is complete. Any shareholder with a position of less than 9,200 shares will receive a cash payment.

“As of the date of this press release, the Company had 82,586,851 common shares issued and outstanding. Effecting the reverse stock split will reduce the number of issued and outstanding common shares to approximately 8,976 shares (as may be adjusted due to rounding),” Ocean Rig in a press release.

Extraordinary Shareholder Meeting

Ocean Rig UDW Inc. (NASDAQ:ORIG) has also announced plans to hold an extraordinary shareholders meeting on November 3, 2017. Top on the agenda at the meeting will be discussions on the ongoing restructuring. The company also plans to discuss authorized share capital reduction in addition to redesigning issued and unissued authorized common shares as Class A, which will trade under the symbol ORIG. Class B shares, on the other hand, are to be used to reduce the number of unissued authorized preferred shares.

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: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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