Oklahoma City-based LSB Industries, Inc. says a mistaken announcement by the New York Stock Exchange that halted trading of its shares on Tuesday caused a 30% drop in its prices.
The halt in trading was to address the impact on the stock price of the dividend paid by the Company on October 8, 2021 to shareholders of record on September 24, 2021 of 0.30 shares of LSB common stock for every share owned.
“Before trading began on the October 12, 2021 ex-dividend date, the NYSE communicated, via an NYSE Group Info Notice, that LSB’s 0.3:1 common stock dividend applied to ALL approximately 79.4 million of the Company’s shares of common stock that were outstanding prior to the dividend payment date. That was incorrect,” stated LSB Industries on Wednesday.
In actuality, the company said the stock dividend was paid on only approximately 30.4 million of LSB’s outstanding shares of common stock. The other approximately 49.1 million shares of the total outstanding common shares were issued to LSB Funding LLC, an affiliate of Eldridge, in the exchange transaction that closed on September 27, 2021 and since they were not issued prior to the September 24, 2021 record date, were not eligible to receive the stock dividend.
LSB stated on Wednesday it believes the distribution of the incorrect information in the NYSE’s Group Info Notice led to a 30% downward adjustment to its closing stock price on October 11, 2021.
In addition to halting the trading of LSB’s common stock the morning of October 12, 2021 during the trading day on October 12th, the NYSE issued an update to its prior Group Info Notice regarding the company’s stock dividend that (1) rescinded their prior Group Info Notice; (2) correctly stated that the approximately 49.1 million shares of common stock issued to LSB Funding LLC in the exchange transaction did not receive the stock dividend that was paid on October 8, 2021 and (3) that stated, “the price adjustment should be reflective of shares outstanding prior to the exchange offer.”
Thus, confirming that the stock dividend only resulted in an approximate 11.5% increase in the number of shares of the LSB’s common stock outstanding on the dividend payment date of October 8, 2021.
The company believes that the most accurate way to assess the impact of the stock dividend on its common stock price on October 12, 2021 would be to divide the number of shares issued for the special stock dividend of approximately 9.2 million shares by the approximately 79.4 million shares outstanding prior to the issuance of the company’s stock dividend, which equates to an estimated 11.5% impact on the company’s stock price, or a reduction of the stock’s October 11, 2021 closing price of $12.83 to approximately $11.35.
As of October 12, 2021, after giving effect to the consummation of the exchange transaction and the issuance of shares in the common stock dividend, LSB had approximately 88.6 million shares of common stock outstanding, consistent with the level projected in the company’s September 27, 2021 press release announcing the closing of the exchange transaction.
Source: Business Wire