Odyssey Marine Exploration sets 1‑for‑25 split ahead of merger
The consolidation would cut outstanding shares to about 2.3 million as a Dec. 2 shareholder vote approaches.
Theo Marchetti
Odyssey Marine Exploration, Inc. NASDAQOMEX said on Friday it will implement a 1-for-25 reverse split of its Nasdaq Capital Market shares on Oct. 29. The consolidation would reduce outstanding shares to about 2.3 million from 58.6 million and meet a financing condition for its proposed merger with privately held American Ocean Minerals Corporation.
Odyssey shares closed at US$0.64 on Nasdaq at 4:00 p.m. EDT on Oct. 15, according to Google Finance's NASDAQOMEX page, before Friday's announcement.
The company said the U.S. Securities and Exchange Commission declared its merger registration statement effective on Oct. 15, and it filed the definitive proxy statement/prospectus on Friday. A special shareholder meeting on Dec. 2 will vote on merger-related share issuance and other proposals.
The prospectus dated Oct. 15 sets the merger exchange ratio at 4.5017 Odyssey shares for each American Ocean Minerals share before consolidation. That becomes 0.1801 after the split.
Split Preserves Proportionate Ownership
The Oct. 16 release says the split would affect shareholders uniformly, leaving ownership percentages unchanged except for fractional-share adjustments. Outstanding warrants and options would receive proportional adjustments to their share counts and exercise prices.
No fractional shares would be issued. Holders otherwise entitled to a fraction would receive cash based on that fraction multiplied by Odyssey's Nasdaq closing share price on the split's effective date.
Odyssey also plans to increase authorized common shares to 82 million from 75 million on Oct. 29. Authorized shares are distinct from the roughly 2.3 million shares expected to be outstanding immediately after consolidation.
The release sets Oct. 26 as the record date for the split, with adjusted trading scheduled from the Nasdaq open on Oct. 29. The split already has shareholder approval and will not require another vote at the December meeting.
Merger Would Change The Shareholder Base
The merger would bring American Ocean Minerals shareholders and financing investors into Odyssey's shareholder base. The Oct. 15 prospectus estimates that existing Odyssey shareholders would retain about 6.6 per cent ownership of the combined company.
"Completion of the reverse stock split is a condition to the obligation of certain investors to provide financing to AOMC and Odyssey to fund the operations of the combined company following merger completion," Odyssey said in its Oct. 16 release.
The Oct. 15 prospectus describes about US$75.6 million in pre-transaction convertible financing and an expected US$156.4 million private investment. The funding is intended to advance exploration, environmental studies and regulatory processes across the portfolio.
Outstanding American Ocean Minerals convertible debentures would convert into its shares immediately before the merger. Shares issued in the private investment would convert into Odyssey shares at the merger's effective time.
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Another seabed developer, TMC the metals company Inc. NASDAQTMC, described a roughly 65,000-square-kilometre exploration and commercial recovery application in its May 1 release. TMC said NOAA had found the application in full compliance, with further review and an environmental impact statement preceding a final permit decision.
Odyssey expects to adopt the American Ocean Minerals name after completion, with its shares trading under a new Nasdaq symbol. The transaction remains subject to shareholder approval and satisfaction or waiver of other closing conditions.
The Dec. 2 meeting will decide whether shareholders authorize the merger-related share issuance and associated proposals. Odyssey's board unanimously recommends approval.
