The McClatchy Co. approved a 10-for-1 reverse stock split Wednesday designed to raise the Sacramento newspaper chain’s sluggish share price.
McClatchy’s board of directors approved the split shortly after McClatchy’s annual shareholders meeting in Sacramento. The company owns 29 daily papers, including The Fresno Bee.
Under the plan, which will take effect June 7, McClatchy will issue one new share of stock for every 10 existing shares.
Shareholders had authorized the board to implement a reverse split of at least 5-to-1, but no more than 25-to-1.
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By taking shares out of circulation, the reverse split isn’t expected to alter McClatchy’s overall valuation, but will increase the price per share. McClatchy closed Wednesday at $1.14, up 3 cents. If the split had happened Wednesday, the price would theoretically have jumped to $11.40 a share.
Because of ongoing struggles in the newspaper industry, McClatchy shares have slumped in recent years. In February, the company was warned that it could lose its New York Stock Exchange listing because the per-share price had fallen below $1 for 30 straight trading days. Delisting would have forced McClatchy to find a less prestigious exchange.
Although McClatchy avoided delisting, the stock price has remained barely above the $1 mark in recent weeks.
McClatchy’s board also expanded its stock buyback program to a maximum of $20 million. The program, which began in August, was initially capped at $15 million. So far McClatchy has bought back $13.1 million worth of its stock, leaving $6.9 million still on the table.
Like reverse splits, stock repurchases are usually intended to raise share prices.