Here's except from final proxy statement for upcoming shareholder vote:
Adopt an amendment to the restated certificate of incorporation of Grubb & Ellis Company (the “Certificate of Incorporation”) to effect a reverse split of Grubb & Ellis Company’s issued and outstanding common stock at an exchange ratio of 1-for-50.
Certainly doesn't sound like a company that is headed for bankruptcy.
I understand your point. It seems unreasonable to expect so rich a return, but there are cases out there where it has happened before...check out XM/Sirius, Ford, KFN, etc.
Also, when you think that GBE was trading at over $1 earlier in 2011 (down from a high of $14 (pre-2008) and just reaching half of JLL and CBRE's P/Sales level takes GBE to $1.50 (after new shares)...I don't think $1-$2 is impossible.
GBE is a well known name and Andrew Farkas has a history in turnarounds and unlocking value. Look what he did with CBRE. Let's hope he has the similar plans for GBE. I hope we know something here pretty soon. Good luck to you and all that are holding GBE shares.
simple typo, was stating nobody pays 10x market cap for a company that is losing assets, revenue and employees at this type of pace. I'm long GBE, will have my fate decided by either a buyout or BK, but to sit here and expect a 10x premium over current price is absurd.
I'll help him or her witht the math...$1.00/$0.14 = 7
Also, JLL and CBRE's market cap = 1 x annual sales. GBE's market cap is at a measley .03 ($14M/$500M).
I think there's some room for appreciation.
Reverse split doesn't mean bankruptcy 100%. Other companies have done a reverse split and haven't gone bankrupt. Lvlt (level 3) and nbg (national bank of Greece which was trading well below $1 before the reverse split a few weeks ago.) I don't think anyone really knows what will happen for sure, but I think that most people who are commenting don't know much about splits...
On the contrary. If there were an up and coming bankruptcy, why go through the hassle of doing a 1 for 50 reverse split?
What it means is that the company intends to continue, and that they have financing of some sort lined up. They are going to do the 1 for 50, there's going to be less than 2 million shares outstanding at something around $6 or $7, and the company is going to issue maybe 10 million new shares to an investor (or investors) who are going to take 80% ownership of the company. Maybe the number of new shares, and the percentage ownership will differ, but that is what is going to happen - virtually guaranteed.
If you believe the company is still going to go down in flames even with another cash infusion, then it all doesn't matter. However, if you believe there is a future, and knowing there is not going to be a bankruptcy filing near term, then buying shares at 13 cents prior to the reverse split could have a good outcome.
I'm not recommending the stock - these turkeys have enriched themselves, raped shareholders, and destroyed the company (again), but, I think it's clear that there won't be a bankruptcy filing at this time.
So if the Board approves a reverse split of 1 for 50, the stock would have to be worth $8.50 per share in order to be worth the current $0.17 that it's worth now. Doubt that it will be worth that much.
"On December 1, 2011 the Board of Directors unanimously approved, subject to the approval of our shareowners, an amendment to the Company’s Certificate of Incorporation to effect a reverse stock split of our issued and outstanding shares of Common Stock, at an exchange ratio of 1-for-50 (the “Reverse Stock Split”). The par value of our Common Stock would remain unchanged at $0.01 per share following the Reverse Stock Split."
See page 41 of this link: