Based on the resolutions at the 34th GSM of Petrol, the Management Board of the Company will do a 1:20 split of PETG shares. This would mean that 1 share would be split into 20 new shares, implying that the overall number of shares would increase from the current 2,086,301 to 41,726,020, whereas the share capital of EUR 52,240,977.04 will remain the same. The action will take place on 1 November 2022, but due to it being a public holiday, trading with the new price and number of shares will start on 2 November 2022.
Yesterday, Petrol published an announcement on the resolution of the GSM of the Company to do a 1:20 share split. According to it, this corporate action will be implemented on the accounts of those holders of PETG shares who will be holders of such shares in the central register of the information system closing on 28 October 2022. The corporate action will be executed on 1 November 2022. Due to that date being a public holiday, the trading will not take place on it. 26 October 2022 will be the last day when PETG share trading and trades settlement will be conducted entirely the same as before. On 27 and 28 October 2022, PETG shares will be traded without any change, but all trades concluded during these two days will be settled by taking into consideration the split ratio.
This would mean that the publicly presented price, orders, and trades will be the same, yet trades will not be settled as concluded and publicly presented – the price per share and the number of shares will be automatically adjusted in line with the 1:20 share split ratio. This will not affect the economic content of the concluded trades in any way because the same share in the issuer’s equity will be exchanged at the same purchase price. From 2 November 2022, inclusive, trading and settlement of trades will be conducted under a new regime, meaning that the volume of shares on the market will increase to 41,726,020, and their price will decrease, that is, it will be divided by 20. Ljubljana Stock Exchange will delete all orders entered prior to that date, meaning that the order book for PETG shares will be empty at the beginning of the trading day on 2 November 2022.
The PETG share split will be performed automatically for the holders of shares via KDD d.o.o. in the central securities registry. Holders of PETG shares will not need to pay anything for the shares obtained based on the PETG share split. The PETG share split costs will not be charged on the PETG share split. The share split has no tax implications since this is a corporate action where the asset value in the form of PETG shares does not change.
This is a positive development as it does not fundamentally change the value of the Petrol stock, but it makes it more available to a wider number of investors. As such, it will surely increase the trading of the stock and thus promote liquidity for the Company, but also the SBITOP index as Petrol is one of its larger constituents. The practice of share splits has been quite popular over the last couple of years, especially in the US, but also in the region. Examples of this in the region are Cinkarna Celje (1:10 share split) and Atlantic Grupa (1:4 share split). This makes Petrol the 3rd regional Company to do a share split in 2022. As the news was announced yesterday, Petrol’s stock price increased by 1.53% by the closing time and amounted to EUR 398.
Petrol share price (2020-2022 YTD, EUR)
Source: LJSE, InterCapital Research
