Why did Rite Aid ask stockholders to vote on a reverse stock split?
The objective of the reverse stock split is to ensure that Rite Aid maintains its listing on the New York Stock Exchange (NYSE), which is in the best interest of its stockholders. Rite Aid was notified on October 16, 2008 that it was no longer in compliance with the Exchange’s share price listing rule because its average closing price per share had fallen below $1.00 per share for 30 consecutive trading days. On February 26, 2009, the NYSE announced that it is suspending application of the share price rule until June 30, 2009, which extends Rite Aid’s cure period to regain compliance. Per the rules of the recent suspension, Rite Aid can now regain compliance by achieving the required $1.00 closing share price and $1.00 average closing share price over the preceding 30 consecutive days on any of the following dates: June 30, 2009; and August 17, 2009. Before the temporary suspension of the share price rule, Rite Aid’s cure period was to end on April 16, 2009.
