TransEnterix (NYSE:TRXC) said today that it plans to pursue a reverse stock split that could see it exchange a single share for as many as 40 shares.
Companies often use reverse splits to buoy their share prices. Research Triangle Park, N.C.-based TransEnterix, which makes the Senhance robot-assisted surgery device, set the range on the proposed split at 1-for-10 to 1-for-40, with the final ratio to be determined by its board after a Dec. 18 shareholder vote.
TransEnterix said the 1-for-20 to 1-for-30 range would reduce its shares to 500 million; at greater than 1-for-30 that number would be 250 million shares.
“We have proactively initiated this reverse stock split to better position the company for long-term success,” president & CEO Todd Pope said in prepared remarks. “We believe that there are many potential benefits to increasing the price per common share and reducing the overall number of shares outstanding, including making the company’s stock more attractive to investors, reducing the daily volatility of our share price and positioning the company to pursue capital-raising transactions as part of its evaluation of strategic alternatives available to the company.”
The news sent TRXC shares, which closed down -2.9% at 30.21¢ apiece yesterday, plunging -24.7 % to 22.54¢ each today in pre-market trading.
Earlier this month the company agreed to amend a previously announced sale agreement with Great Belief International for its AutoLap system. On July 10, Research Triangle Park, N.C.-based TransEnterix announced that it dealt the AutoLap assets it had acquired in October 2018 along with Medical Surgery Technologies to Great Belief International for $47 million; the new agreement saw the AutoLap system go to GBI for $17 million, but removed an obligation for GBI to make a $30 million equity investment in TransEnterix.
In September TransEnterix priced a public offering of 28 million shares for gross proceeds of approximately $20.3 million.