Shares of Canadian Overseas Petroleum Limited (LON: COPL) fell 12.5% after the oil company announced a 100 to 1 stock split, negatively affecting some shareholders.
The company noted that it would issue 1 share for every 100 shares held by shareholders to significantly boost its share price, making it more attractive to institutional investors who like buying shares trading at higher prices.
However, investors were unhappy to hear that the company would abolish all fractional shares resulting from the share consolidation in cases where a shareholder has less than 100.
For example, a shareholder with 2056 shares would get 20 new shares after the consolidation, with COPL writing off the 56 extra shares equal to 0.56 shares in the new entity.
The new rule may affect man shareholders who hold shares that are not multiples of 100, hence, today’s decline.
COPL has decided to consolidate its shares after acquiring Atomic Oil & Gas in March of this year, which led to its stock suspension from trading on the London Stock exchange from mid-March to mid-August.
The oil company’s London shares were suspended on March 17, 2021, after which they were cancelled on April 21, 2021, before the enlarged group was listed afresh on the LSE on August 17, 2021.
The share consolidation will become effective on October 1, 2021, after which the company’s shares shall trade at a much higher valuation.
COPL share price.
COPL shares fell 12.5% to trade at 0.28p, falling from Friday’s closing price of 0.32p.
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