Mackenzie Extends Tender offer of Class B Shares after PECO Reverse Stock Split
Concerned about your investment in Phillips Edison & Company, Inc. (PECO)?
On September 22, 2021, Mackenzie Capital Management, LP launched a third-party tender offer to purchase Class B shares of Phillips Edison & Company, Inc. (PECO) for $20.00 per share. This comes after the grocery store REIT completed its underwritten initial public offering of 17,000,000 shares of common stock at a price to the public of $28.00 per share.
The Common Stock issued in the REIT’s underwritten IPO began trading on the Nasdaq on July 15, 2021. The stock held by investors prior to the IPO was converted into Class B common stock. The Class B common stock will convert to the listed common stock on January 17, 2022. At that point, it can be traded into the open market.
According to the letter, it is possible that an influx of sellers could put “significant downward pressure” on PECO’s trading price once the Class B Shares convert to traded shares in 2022.
Shares of PECO’s common stock began trading on the Nasdaq Global Select Market on July 15, 2021, under the ticker symbol “PECO”. At close yesterday, shares were trading at $29.90.
One-for-three Reverse Stock Split
Phillips Edison & Company, Inc. announced on July 1, a one-for-three reverse stock split of each issued and outstanding share of its common stock, and a reclassification transaction in which each issued and outstanding share of Common Stock (following the reverse stock split) changed into a share of its newly created Class B common stock.
After its board of directors approved the reverse stock split on June 14, 2021, the company’s stockholders approved the reclassification transaction on June 18, 2021. This transaction indicates that stockholders received one share of post-split Class B Common Stock for every three shares of pre-split Common Stock they held.
The REIT originally proposed a one-for-four reverse stock split last November but was delayed due to “market conditions,” according to filings with the SEC.
What does a Reverse Stock Split Mean for Investors?
The company claims that while the reverse stock split reduced its total shares of Common Stock outstanding, it had “no economic impact to its stockholders, as all were impacted equally and proportionally.”
When a company completes a reverse stock split, each outstanding share of the company is converted into a fraction of a share. Stockholders may lose money as a result of fluctuations in trading prices following reverse stock splits.
While PECO’s shares were valued at $8.75 per share prior to the split, the shares had been trading on the secondary market at a much lower value. Earlier this year, the company was buying shares from stockholders for $5.75 per share. The original offering price was $10.00 per share.
In many cases, when a non-traded REIT is listed on a securities exchange it is at a deep discount from the NAV.
The White Law Group has received numerous calls from investors who are concerned about their investments in non-traded REITs such as Phillips Edison & Company.
Non-traded REITs like Phillip Edison & Company Inc., are complex and inherently risky products. Lack of liquidity is often problematic for many investors. Investors looking to sell often have difficulty finding a buyer, and can suffer significant losses on the sale.
PECO suspended its share repurchase program effective March 31, 2020. Further, the REIT is now paying dividends at an annualized rate of $1.02 per Share, an approximate 50% cut from its last distribution rate of $2.01 per Share (post reverse-split).
Broker dealers are required to inform clients of the risks associated with investment recommendations and to ensure that those recommendations are suitable for the investor in light of the investor’s age, risk tolerance, net worth, and investment experience. Firms that fail to do so, may be held responsible for any losses.
Potential Lawsuits to Recover Financial Losses
If you have suffered losses investing in Phillips Edison & Company Inc., please contact The White Law Group at 888-637-5510 for a free consultation.
For more information on the firm’s investigation please see:
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois. For more information on the firm, visit www.WhiteSecuritiesLaw.com.