RGS Energy to conduct a second 1-for-20 reverse stock split
LOUISVILLE — Real Goods Solar Inc., the troubled Louisville-based solar installer that does business as RGS Energy, this week will conduct its second 1-for-20 reverse stock split in just more than 12 months in an effort to stave off delisting by the Nasdaq stock exchange.
The company (Nasdaq: RGSE) disclosed in a filing with the U.S. Securities and Exchange Commission that shareholders, in a special meeting on Friday, approved a reverse split and authorized the board of directors to determine the ratio and timing of the split. The board of directors followed that vote by authorizing a 1-for-20 split that will become effective Wednesday at 11:59 p.m. Eastern time.
RGS officials could not be reached Tuesday.
Based on RGS Energy’s share price of 29 cents late Tuesday afternoon, the reverse split — in which one share of Class A common stock will be issued for each 20 owned — could boost the share price to somewhere in the neighborhood of $5.80 when trading opens Thursday.
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That would help bring RGS back into compliance with a Nasdaq rule that requires a minimum share price of $1. Nasdaq officials had warned RGS of the compliance issue in December after the company’s stock price remained below $1 for more than 30 days in a row. RGS has until June 20 to regain compliance — by having its share price remain at $1 or more for at least 10 business days in a row — or face delisting from the exchange.
RGS faced a similar situation early last year and in May of last year also carried out a 1-for-20 reverse split that boosted shares to $2.73 apiece. But the company’s share price has continued to fall steadily since.
Even if this week’s reverse split helps RGS regain compliance related to the minimum share price, the company still faces potential delisting. In April, Nasdaq also warned RGS that it was out of compliance with a rule that requires a minimum of $2.5 million in stockholder equity. RGS’ shareholder equity — its total assets minus total liabilities — was at a deficit of about $1 million at the end of 2015 and has sunk even further since, to a deficit of about $4.4 million as of March 31, according to the company’s first-quarter earnings report.
In addition to disclosing the stock split, RGS also disclosed that it has entered into a loan modification agreement with Solar Solutions Distribution LLC to reschedule a $167,513.41 payment due May 15 to June 3. That deal requires RGS to issue Solar Solutions 581,644 shares of its Class A Common Stock at a price of 28.8 cents per share as payment on the revolving line of credit under the loan agreement. That move is likely what caused RGS’ share price to slide Tuesday from Friday’s close of 33 cents per share.
RGS posted a first-quarter loss this year of $3.7 million on revenue of $4.9 million.
