In judicial reorganization since 2016, the shares of Hey have been traded at values below R$1, and this can have negative consequences. The company approved a proposal to merge 50 papers into one, as a way of keeping prices high. The decision still needs to go through a shareholders’ meeting.
This operation is called grouping or inplit. When shares are very cheap, as is the case with Oi, companies can combine several shares into one, which will be more expensive.
Shares traded for less than R$1 are called penny stocks — “penny” is what Americans call their penny. These very cheap stocks are a problem.
With low values, they do not attract investors, reducing their business volume, which affects their liquidity.
In addition, any variation of cents in its price represents a relevant percentage — R$0.10 more or less doesn’t mean much for a R$50 share, but it is 10% of a R$1 share. This means very high volatility.
B3 determines that, if shares are traded for less than R$1 for more than 30 consecutive trading sessions, the company must take measures to prevent this from happening before the next shareholders’ meeting, under penalty of suspension of trading. Grouping is one of the possible solutions.
Oi’s proposal needs to be approved by shareholders
The proposal approved by the board of Oi provides for reducing the number of shares from 6.6 billion to 132 million.
The company’s shares closed on Monday (17) at R$0.81 (preferred shares) and R$0.36 (common shares). The grouping could take them to around R$40 and R$20, respectively.
The general shareholders’ meeting will be called on November 18th. If the proposal is approved, they will have 30 days to adjust their positions in multiples of 50 for the conversion.
Oi says the inplit will allow the shares to return to the Ibovespa, Brazil’s main stock index.
Company wants to end judicial recovery
Oi came in with a request for judicial reorganization in 2016. At the time, the company had R$65.4 billion in debt.
Since then, the company has gotten rid of several parts of its operation. Oi Móvel is the best example of this: it was sold to Claro, TIM and Vivo. In addition, your satellite tv business and its participation in fiber optic company V.tal were passed on to other companies.
The company’s net debt is around R$16 billion. In August 2022, Oi requested the closure of the judicial reorganization process. The Public Ministry of Rio de Janeiro (MPRJ) made some caveats.
With information: Power 360, Telesynthesis.