Electric vehicle startup Arrival is undergoing a reverse stock split to ensure it meets the minimum listing requirements for the Nasdaq stock exchange.
Arrival, which was founded in Britain, first received a warning from the Nasdaq due to a low trading price back in November after its price went under $1 for 30 consecutive days.
The reverse stock split, agreed upon by its board of directors, will see Arrival shares become consolidated at a 1-for-50 ratio.
Arrival’s authorised share capital will be $540,000 divided into 54,000,000 ordinary shares. Existing shares will shrink from around 763,108,955 to 15,262,180.
When companies want to distribute liquidity and make their shares more accessible, they can perform a stock split, which involves dividing existing shares into smaller units. In a reverse stock split shares are combined at a defined ratio.
Last week Arrival said it plans to merge with the special purpose acquisition company Kensington Capital Acquisition Corp. It would mark the company’s second SPAC merger after it went public via a blank-cheque deal in 2021.
Speaking about the acquisition, Arrival’s CEO Igor Torgov, said: “This transaction offers a potentially significant capital infusion and additional support in bringing our XL Van to market.”
Torgov added: “We are looking forward to partnering with Kensington to meet our production goals as we aim to commercialise our XL Van by the end of 2024.”
Despite raising £250m from Westwood Capital in March, Arrival said it remained on the hunt for more funding with a current runway up to “late 2023”. It sold a stake valued at £41.4m to Antara the month prior.
The automotive firm in its 2022 full-year results says it estimates losses up to as much as £840m. Arrival has taken steps to cut costs, including axing half of its workforce at the start of the year.
Cazoo earlier this year carried out a reverse stock split after it too could not adhere to the Nasdaq’s $1 rule.