Alvarion Ltd. is considering a reverse stock split as the Israeli telecommunications-equipment maker comes up against a deadline to bolster its share price or be ejected from the Nasdaq Composite Index.
Nasdaq issued the company with a delisting notice after its shares dropped below the minimum bid requirement of $1, Alvarion said on May 1. The stock needs to trade at least $1 for a minimum 10 consecutive business days by Oct. 23 for the company to remain in compliance with the exchange’s rules, according to the statement. The shares slid 3.2 percent to 42.6 cents in New York today.
A reverse stock split, where the number of shares outstanding in the company is reduced to boost their par value or earnings-per-share, is one way the company may be able to maintain the listing, according to Chief Financial Officer Lior Shemesh.
“A reverse stock split is on the table but not something I would prefer to do,” Shemesh said by phone from Tel Aviv today. The best option for Alvarion would be “to recover the business of the company and show profitability for a few quarters and shares will be at the level they should be.”
Alvarion has had discussions with Nasdaq to extend the deadline by another six months, Elana Holzman, vice president of investor relations, said on the call with Shemesh.
The company, which announced the sale of a part of its patent portfolio yesterday to Wi-LAN Inc. for $19 million, is in talks with potential investors interested in buying a stake, according to Shemesh.
“We have discussions with many parties as the most important thing is to bring cash to company,” he said. “If we can bring someone who can be a strategic partner, by all means, that is even better. With the patent sale we have bought some time.”
Rob Madden, a spokesman for Nasdaq OMX Group Inc., didn’t immediately return a call seeking comment.