Shareholders in 3DO will vote on August 20 on a reverse stock split which would see each shareholder being issued one share of stock for every eight shares they currently own, following the decision of the board of directors of the company to approve the plan yesterday.
The unusual move is designed to rescue 3DO’s listing on the NASDAQ, which is endangered by the failure of the company to comply with the exchange’s minimum bid price rule. Under this rule, companies must trade at a price of over $1.00, but 3DO stock currently trades at less than half that, and hasn’t been over $1.00 since the beginning of April.
On June 26 NASDAQ began a process aimed at delisting 3DO stock, but this has been delayed pending a hearing on August 8. The company hopes that the exchange will accept the reverse split at this hearing and grant it time to put it into action.
3DO is in it for the long haul, and it is important to maintain our Nasdaq listing. 3DO and its stockholders have persevered through a tough transition period in the game industry, according to Trip Hawkins, chairman and CEO of 3DO. Hawkins is also the single largest shareholder in 3DO, owning 36.2 per cent of the 61.9 million outstanding shares.