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SHANGHAI - XChange TEC.INC (NASDAQ: XHG), a technology company, has revealed plans to alter the ratio of its American depositary shares (ADSs). The adjustment will change the representation from one ADS for every 120 Class A ordinary shares to one ADS for every 2,400 Class A ordinary shares. This change is effectively a one-for-twenty reverse ADS split for ADS holders, with no modification to the Class A ordinary shares themselves. The announcement comes as the company’s stock trades at $0.12, having lost over 98% of its value in the past year, according to InvestingPro data.
The new ADS ratio is set to take effect at the start of trading on May 9, 2025, on The Nasdaq Capital Market. Holders of the company’s ADSs will be mandated to exchange their old ADSs for new ones, receiving one new ADS for every twenty old ADSs surrendered to The Bank of New York Mellon, the company’s depositary. InvestingPro analysis shows the stock typically trades with high price volatility, with 12 additional key insights available to subscribers.
XChange TEC.INC has stated that no fractional ADSs will be issued during this process. Instead, fractional ADSs will be aggregated, sold, and the resulting net cash proceeds, after the deduction of associated fees, taxes, and expenses, will be distributed to the ADS holders by the depositary.
The company anticipates that the ADS price will increase proportionally following the ratio change. However, it has cautioned that it cannot guarantee the post-change ADS price will be equal to or greater than twenty times the pre-change price.
The adjustment in the ADS ratio is a strategic move by XChange TEC.INC and is a common practice among publicly traded companies seeking to adjust their stock price or consolidate shares. With a market capitalization of just $2.4 million and a weak Financial Health Score of 1.57 out of 10, as reported by InvestingPro, the company faces significant challenges. The continued trading of ADSs under the ticker symbol "XHG" on The Nasdaq Capital Market ensures that the transition for investors should be seamless.
This news is based on a press release statement from XChange TEC.INC.
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