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The purpose of the Reverse Stock Split is to increase the per share trading value of the Common Stock. The Common Stock currently trades on the Nasdaq Capital Markets tier of The Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “WMIH”. A reverse stock split could allow a broader range of institutions to invest in the Common Stock (namely, investment funds that are prohibited from buying stocks with a price below a certain threshold), potentially increasing the trading volume and liquidity of the Common Stock. A reverse stock split would also help increase analyst and broker interest in the Common Stock. Because of the trading volatility often associated with lower-priced stock, many brokerage houses and institutional investors have adopted internal policies and practices that either prohibit or discourage them from investing in such stocks or recommending them to their customers. Some of those policies and practices may also function to make the processing of trades in lower-priced stocks economically unattractive to brokers.
In addition, Nasdaq has several continued listing criteria that companies must satisfy in order to remain listed thereon. One of these criteria, Nasdaq Listing Rule 5450(a), requires that a company’s common stock have a closing bid price that is greater than or equal to $1.00 per share. If the closing bid price of the Common Stock is below the minimum $1.00 per share required for continued listing by Nasdaq for thirty consecutive business days, Nasdaq will notify the Company and provide the Company an initial period of 180 calendar days to regain compliance. Currently, the Company meets all Nasdaq continued listing criteria, including the minimum closing bid price requirement. On [ ], 2018, the closing price of the Common Stock was $[ ]. If the Common Stock trades under $1.00 in the future, the Company may be at risk of not complying with Rule 5450(a). In addition, based on the Reverse Stock Split ratio, the Reverse Stock Split is expected to result in a per share trading price of the Common Stock above $4.00 per share, which is a minimum requirement for listing on the Nasdaq Global Select Market, and, upon satisfaction of all other minimum requirements for such listing, the Company intends to have the Common Stock listed on the Nasdaq Global Select Market.
In addition, in connection with the Reverse Stock Split, we believe that the number of authorized shares of our Common Stock should be proportionately decreased as described above under “—Reverse Stock Split Adjustments”. If the Reverse Stock Split is effectuated, we do not anticipate the need for 3.5 billion authorized shares of Common Stock in the foreseeable future.
