Hong Kong-listed Landing International said it was reducing the number of shares in issue by consolidating every 50 existing shares into one in an effort to boost its share price and improve its ability to use equity to raise finance.
The company also said it was changing the board lot size from 60,000 shares to 1,200 shares once the reorganization becomes effective. The plan needs the approval of shareholders and the Hong Kong Stock Exchange.
The capital reduction proposal will have no impact on the operations of the group, apart from the expenses related to the transaction, it said.
“The board considers that the primary driver behind the share consolidation is that it will result in an upward adjustment to the share price of the company,” it said. “A very low share price, such as the current price of the existing shares, carries the undesirability of being viewed as a vehicle for speculation and this can have the effect of deterring potential investors, and in particular institutional investors.”
The company said the floor price for institutional investors tends to be about HK$7.8 a share.
“Accordingly, the board is of the view that potential investors find investing in the existing shares which currently trade at or below HK$0.20 unattractive and that the share price after the share consolidation will ensure that the shares of the Company are not excluded from investment by institutional investors.”
Stock in the company, which operates an IR on Jeju Island, South Korea, slumped 24 percent in Hong Kong trading to $0.15.