CMG Pharmaceutical(058820) said on the 12th that it will proceed with a reverse stock split. This combines multiple shares into one to reduce the number of shares outstanding and raise the per-share price. The company decided to do so to escape "coin stock," in which the per-share price is below 1,000 won, and to eliminate the risk of being put under administrative issue.
CMG Pharmaceutical will hold an extraordinary shareholders meeting on the 2nd of next month to vote on the reverse split. The plan is to merge 10 common shares with a face value of 500 won into one share worth 5,000 won. If the item passes, trading will be suspended from Oct. 1 to 26, and the consolidated shares will be relisted on the 27th.
CMG Pharmaceutical's share price stayed below 1,000 won for 30 consecutive trading days. Under the Korea Exchange (KRX) KOSDAQ listing rules, this results in designation as an administrative issue. While under administrative issue, if the share price remains below 1,000 won for 45 consecutive days out of 90 trading days, delisting proceedings may begin.
The company plans to avoid delisting through the reverse split. It also said it will speed up development of treatments for lung cancer and osteoarthritis. A CMG Pharmaceutical official said, "We will enhance corporations value."