Spencer Platt
Community Bank of New York (New York Stock Exchange: NYCB) revealed plans earlier this week to present a one-for-three reverse common stock split to shareholders for approval.
The potential move coincides with NYCB's closing on Monday of its previously announced ~$1.05 billion capital injection deal with investors, including Steven Mnuchin's Liberty Strategic Capital, funds managed by Hudson Bay Capital Management, funds managed by Reverence Capital Partners and others.
The reverse stock split plan aims to make the offering price more attractive to a broader group of institutional and retail investors, as well as increase the number of authorized common shares to at least 1.7 billion, the company said.
New York Community (NYCB) will also ask shareholders to exempt certain investors from the provision that prohibits any person owning more than 10% of the then outstanding common shares from voting such shares that exceed the 10% threshold. ; and approval of the issuance of common shares exceeding 19.9% of the total voting power of the company's securities.
The regional bank's shares suffered badly this year, falling about 67%, after posting a surprise quarterly loss and a cut to its dividend. NYCB came under further pressure in late February when the company said it had identified material weaknesses in internal controls and revised upward its loss due to a goodwill impairment charge.
NYCB encouraged up to 4.3% at $3.39 per share in midday trading Tuesday. By comparison, NYCB changed hands at $10.38 a share on Jan. 30, a day before the tumult began.
