PME African Infrastructure Opport. PLC (LON:PMEA) Shares Slip on Reverse Stock Split


PME African Infrastructure Opport PLC (LON:PMEA) shares were down 50% on Wednesday after the company announced a 1 for 100 reverse stock split. The company has a market cap of $5.53 million at 40.97 million shares outstanding. Share prices have been trading in a 52-week range of $0.04 to $0.20.

PME African Infrastructure Opport PLC is a company that owns approximately three C30 locomotives and a commercial property in Dar-es-Salaam Tanzania through its subsidiaries, PME Locomotives and PME Properties Limited. Its nvestment objective is to achieve significant total return to investors through investing in various infrastructure projects and related opportunities across a range of countries in sub-Saharan Africa.

In particular, the company’s investment focus is involved in the greenfield projects in Angola, Botswana, Mozambique, Nigeria, Rwanda, South Africa, Tanzania, Uganda and Zambia. Its investing policy is  to realize remaining assets and to return both existing cash reserves and the proceeds of realization of the remaining assets to shareholders through investing in various sectors, such as transportation, telecommunications, energy, water and sanitation, and infrastructure-related real estate sectors.

In a press release this week, PME African Infrastructure Opport PLC announced a 1 for 100 reverse stock split. This is a process by which existing shares are merged to form a smaller number of proportionally valued shares. It does not add or subtract value from the company.

According to the announcement, this move is expected to lead the company’s common stock to  trade at approximately hundred times the price per share at which it trades prior to the effectiveness of the reverse stock split. Of course,  the company is not able to guarantee that  the price of its common stock after the reverse split will reflect the 1 for 100 reverse split ratio.

In addition, the restricted stock of the company  will also be proportionally adjusted to reflect the reverse split. Fractional shares will be rounded up as well.

DISCLAIMER: There is a substantial risk of loss with any speculative asset, especially small cap stocks. The opinions expressed are those of the author, and do not constitute recommendations to buy or sell a stock. Do your own research before committing capital.