Trinity Biotech Announces Reverse ADS Split to Regain Compliance
Trinity Biotech Plc. (NASDAQ: TRIB), a developer and marketer of diagnostic systems, has announced a significant change in the ratio of its American depositary shares (ADSs) to Class A ordinary shares. Effective from February 21, 2024, the current ratio of one ADS representing four Class A ordinary shares will be adjusted to one ADS representing twenty Class A ordinary shares.
This adjustment, known as a one-for-five reverse ADS split, is aimed at helping the company regain compliance with Nasdaq’s minimum bid price requirement of $1.00. It is also expected to attract a broader pool of potential investors who may have been previously deterred by the ADSs trading below the $1.00 threshold.
Trinity Biotech’s Class A ordinary shares will remain unaffected by this ratio change. However, ADS holders will be required to exchange every five old ADSs for one new ADS on a mandatory basis through The Bank of New York Mellon, the depositary bank. Notably, no fractional new ADSs will be issued, and any fractional entitlements will be aggregated and sold. The net cash proceeds, after deducting fees, taxes, and expenses, will then be distributed to the relevant ADS holders.
While the company anticipates an increase in the ADS price proportionally following the ratio change, there is no guarantee that the post-change ADS price will be equal to or greater than five times the pre-change ADS price.
Trinity Biotech specializes in diagnostic products for detecting infectious diseases and quantifying Haemoglobin A1c and other chemistry parameters. With operations in the United States, Germany, France, and the U.K., as well as a vast network of international distributors and strategic partners in over 75 countries, the company has a global presence in the market.
According to InvestingPro data, Trinity Biotech currently has a market capitalization of $26.44 million USD. Despite challenging market conditions, the company has shown strong returns over the last month, with a 16.67% increase, and even more significant returns over the last three months, at 33.33%.
However, investors should be aware of the company’s substantial debt burden and the fact that analysts do not anticipate Trinity Biotech to be profitable this year. Additionally, the company’s cash burn rate raises concerns about its ability to invest in growth opportunities or withstand further market downturns. Nonetheless, Trinity Biotech’s liquid assets currently exceed its short-term obligations, suggesting some financial flexibility in the near term.
At present, Trinity Biotech’s share price stands at $0.56 USD, with a 1 Month Price Total Return of 16.67%. The next earnings date is scheduled for March 7, 2024.
Analyst comment
Positive News: Trinity Biotech Plc. has announced a one-for-five reverse ADS split to regain compliance with Nasdaq’s minimum bid price requirement and attract new investors. The company has shown strong returns in recent months.
Market Outlook: The ratio change is expected to increase the ADS price proportionally, but there is no guarantee it will be five times the pre-change price. Concerns include the company’s substantial debt burden, lack of profitability, and cash burn rate. However, Trinity Biotech has enough liquid assets to maintain financial flexibility in the near term.
