5E Advanced Materials announces 1-for-23 reverse stock split

5E Advanced Materials , Inc. (NASDAQ:FEAM), a company specializing in nonmetallic mineral mining with a market capitalization of $21.74 million, announced today that it will undergo a reverse stock split of its common stock at a ratio of 1-for-23, effective at the close of business on February 14, 2025. The announcement comes as the company’s stock trades near its 52-week low of $0.30, having declined over 75% in the past year.

InvestingPro analysis reveals concerning trends about the company’s financial health, with 16 key risk factors identified. This decision follows the approval by the company’s stockholders during the 2024 Annual Meeting held on January 21, 2025, and subsequent determination of the exact ratio by the Board of Directors.

The reverse stock split is expected to begin trading on a split-adjusted basis when markets open on February 18, 2025, under the existing ticker symbol "FEAM" and a new CUSIP number of 33830Q 208.

According to InvestingPro’s Fair Value analysis, the stock appears to be trading below its intrinsic value, though investors should note the company’s weak financial health score of 1.05 out of 5 and significant debt-to-equity ratio of 34.73.

The par value and other terms of the common stock will remain unchanged by the reverse stock split. The number of CHESS Depositary Interests (CDIs) representing the company’s shares will also be proportionately reduced, maintaining the 1:10 share-to-CDI ratio.

Stockholders who would otherwise hold a fractional share post-split will not receive a fractional share. Instead, they will be entitled to a cash payment equivalent to the fractional share’s value, calculated based on the closing price per share on The Nasdaq Global Select Market, adjusted for the reverse stock split, as of February 14, 2025. The same principle will apply to CDI holders, with the depository nominee receiving a cash payment in lieu of any fractional CDIs.

This move is part of the company’s amendments to its Amended and Restated Certificate of Incorporation, as detailed in its Definitive Proxy Statement filed with the SEC on December 26, 2024.

The company has stated that no further interest will be held by stockholders or CDI holders with respect to their fractional shares or CDIs after the reverse stock split, except for the right to receive the cash payment.

For a deeper understanding of FEAM’s financial position and prospects, investors can access comprehensive analysis and real-time updates through InvestingPro, which offers detailed Pro Research Reports covering over 1,400 US stocks, including FEAM’s complete financial health assessment and future outlook. These include, but are not limited to, the anticipated effective date of the reverse stock split and the commencement of trading on a split-adjusted basis.

In other recent news, 5E Advanced Materials has seen a flurry of developments. The company’s first quarter of 2025 was marked by the delivery of its initial boric acid shipment and a strategic pivot in byproduct selection.

Despite these strides, Maxim Group recently reduced its price target on 5E Advanced Materials to $1.00 from $1.25, while maintaining a Buy rating on the stock, as a result of updated forecasts due to the company’s convertible debt conversion to equity and recent equity and warrant transactions with lenders.

In addition, 5E Advanced Materials has entered a restructuring agreement with key lenders. This plan aims to strengthen the company’s balance sheet and secure funding up to $30 million, involving the equitization of senior secured convertible notes and the nomination of new board members by the lenders. This restructuring, subject to shareholder approval, is seen as a step towards long-term success for the company.

On the leadership front, H. Keith Jennings has resigned from the company’s Board of Directors, including his roles as Chairman of the Audit Committee and member of the Compensation Committee, effective December 31, 2024. The company has not yet announced a successor for Jennings.

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