Emmis Communications Corp. has officially avoided a delisting from the Nasdaq Stock Market, thanks to the reverse stock split the Indianapolis-based media company implemented this month.
Nasdaq said in a notice Monday that it informed Emmis that the company was "now in compliance with all applicable requirements for continued listing on Nasdaq."
Emmis shareholders voted to approve the one-for-four reverse stock split July 7. The split reduced the number of Emmis shares from more than 47 million to fewer than 12 million, but raised the price of each share from about 80 cents to more than $3.20. Shares closed Tuesday at $4 each.
Prior to the split, Emmis had long been out of compliance with the Nasdaq exchange’s rule requiring shares trade for at least $1 each. Emmis shares hadn't met that threshold since Oct. 22, when the stock closed at $1 per share.
Emmis received a letter from Nasdaq in December notifying the company that its stock had closed below the exchange’s minimum $1-per-share requirement for 30 straight business days.
Nasdaq rules gave Emmis 180 days, or until June 6, to get back in compliance. To do so, Emmis stock needed to close higher than $1 per share for 10 straight business days before the end of the 180-day period.
Emmis, however, avoided a decision on the delisting by requesting a hearing with the exchange in June and presenting its plan to perform the reverse stock split.
Without its Nasdaq listing, Emmis shares would be relegated to penny-stock status on the over-the-counter bulletin board or on the pink sheets. Once that happens, shares are harder for investors to buy and sell.
The situation isn't a new one for the company. Emmis has averted a delisting three times in the last six years. The company was warned about possible delistings in November 2010 and in October 2009, but its stock rebounded both times.