OLD GREENWICH, Conn. - Star Equity Holdings, Inc. (NASDAQ: STRR; STRRP), a diversified holding company, has announced a reverse stock split of its common stock at a 1-for-5 ratio. The reverse split will take effect after the market closes on Thursday, June 14, 2024, and shares will begin trading on a split-adjusted basis on the Nasdaq Global Market on Monday, June 17, 2024.
This corporate action will reduce the number of outstanding shares from approximately 15.8 million to around 3.2 million. The company's ticker symbol, STRR, will remain unchanged, although a new CUSIP number (85513Q301) will be assigned to the post-split shares.
The move was approved by Star Equity's shareholders on June 20, 2023, and later by the Board of Directors on May 24, 2024. The primary goal of the reverse split is to elevate the per-share trading price to comply with Nasdaq's minimum bid price requirement, which is essential for the company to maintain its listing on the exchange.
As a result of the reverse split, every five shares of the company's pre-split stock will be automatically combined into one new share, with no change in the par value of $0.0001 per share. Shareholders who would otherwise hold a fractional share after the reverse split will receive one full share of post-split common stock, eliminating the issuance of fractional shares or cash in lieu thereof.
The reverse split will also proportionally adjust the number of shares available under the company's equity incentive plans and the number of restricted stock units outstanding. Furthermore, all stock options and warrants will be proportionally adjusted to reflect the reverse split.
Star Equity Holdings operates through two divisions: Building Solutions, which includes modular building manufacturing among other services, and Investments, which manages the company's real estate assets and investment positions in various entities.
The information in this article is based on a press release statement from Star Equity Holdings, Inc.
In other recent news, Star Equity Holdings experienced a challenging first quarter in 2024, with revenues plummeting by 26.1% to $9.1 million due to delayed customer financing for key commercial projects. Additionally, the company's gross profit experienced a sharp decline of 63.1% from the previous year. Despite these setbacks, Star Equity Holdings remains confident in its sales pipeline and backlog.
In a strategic move, Star Equity Holdings has acquired Timber Technologies, a manufacturer of engineered wood products. This acquisition, expected to close in June 2024, is anticipated to bolster the company's Building Solutions Division. The acquisition was financed by a $7 million term loan from Bridgewater Bank at a 7.85% interest rate.
The company did not meet expected financial targets for the first quarter of 2024, but the acquisition of Timber Technologies signals a potential avenue for future growth. Despite the current industry-wide challenges, Star Equity Holdings is looking forward with a focus on market expansion and synergies between its divisions.
InvestingPro Insights
In light of Star Equity Holdings, Inc.'s recent announcement of a reverse stock split, investors might look for additional data to understand the company's current financial position. According to the latest metrics from InvestingPro, Star Equity Holdings has a market capitalization of $13.31 million. The company's revenue for the last twelve months as of Q1 2024 stands at $42.56 million, although it has seen a decline of 26.45% in revenue growth during the same period. The gross profit margin was reported at 21.7%, indicating the percentage of revenue that exceeds the cost of goods sold.
From an investment standpoint, one of the key InvestingPro Tips for Star Equity Holdings is that it holds more cash than debt on its balance sheet, which can be a positive sign of financial stability. However, it's also noted that the company is quickly burning through cash, which could be a cause for concern. Additionally, Star Equity Holdings does not pay a dividend to shareholders, which might influence the investment decisions of those seeking regular income from their holdings.
While assessing the investment potential of Star Equity Holdings, investors can further explore these aspects and more on InvestingPro. For those interested in a deeper dive into the company's financials, InvestingPro offers a wealth of additional tips—there are currently 6 more listed for Star Equity Holdings. To make the most of this resource, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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