Delcath Systems, Inc. (NASDAQ: DCTH) is having a relatively strong start in the pre-market trading hours this morning. However, at the moment, investors are frustrated, and for good reason. If you've followed CNA Finance recently, you've seen a lot of coverage on the stock, looking at it from the prospective of investors. At the end of the day, the reverse split has become more and more concerning over the past few months. Today, we'll talk about the story and the latest information we know thus far. Before we do, a special thanks goes out to our friends at Trade Ideas for being the first to alert us to today's gains. Currently (8:08), DCTH is trading at $0.13 per share after a gain of $0.01 per share or 4.50% thus far today.
So... What Reverse Split Are We Talking About With DCTH?
As mentioned above, investors have been frustrated with Delcath Systems, and most of that frustration stems from the company's plans to move forward with a reverse split. However, in order to move forward with the RS, the company needs its investors to vote yes on the split, and it doesn't look like that's going to happen.
Ultimately, this year, the company has made multiple attempts at a reverse split, and this time around, the company may have pushed on investors a bit too hard. Ultimately, since the company couldn't convince investors to vote yes by the first deadline, the deadline on the vote was moved to September 7th, 4 days ago. While waiting on this deadline, investors complained about several calls coming from various phone numbers. These calls were apparently call center representatives that were hired by DCTH in order to coerce investors to vote “Yes” on the split. Unfortunately, these reps were a bit pushy, and after listening to one of the calls personally, it's clear that bullying tactics were used in order to flip votes.
It's Clear The Vote Was No Yet Again
So far DCTH hasn't come out and told investors whether or not the RS was voted to go through. However, if I was a betting man, I'd bet that the investors voted against the reverse split. There are a couple of reasons for my opinion here. Here's how I see it...
- Investors Themselves – First off, from the emails and StockTwits messages that I've received from investors surrounding the potential Delcath Systems reverse split, it's clear that investors are largely against the reverse split. Considering that these same investors would have to vote yes in order for a RS to take place, and investors don't seem to be willing to do so, it only makes sense that a no vote would be the result.
- The Company – At this point, it has become pretty clear that investors have shot down the idea of an RS. The biggest reason is the company. If the RS was voted for, the company would have had a press release out by now, talking about the $13.7 million this would open up and the debt the reverse split would extinguish. However, for some time now, it seems as though DCTH has been a turtle, hiding in its shell until it had something good to tell investors. Well my friends, the turtle has yet to poke its head out of the shell. Unfortunately, there has been no news. Considering the fact that the company is so quiet, it only makes sense that the RS was voted against and the company is trying to figure out what their plan will be moving forward before addressing investors. While I don't agree with this practice, it seems to be the status quot for DCTH.
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What We'll Be Watching For Ahead
Moving forward, the CNA Finance team will keep a close eye on DCTH. In particular, we're interested in following the story to see if our prediction that the RS was voted down is correct. We're also interested in seeing what the company does next as we believe that Chapter 11 bankruptcy is the most likely outcome if the RS was indeed voted down as we expect. Nonetheless, we'll continue to follow the story closely and bring the news to you as it breaks!
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