On January 14, OneSmart International Education Group Ltd. (ONE) announced the ratio change of its American Depository Shares (ADS). Consequently, the stock dove deep in the after-hours.
During the regular session, ONE suffered a loss of 5.74% at its closing price of $0.1872. Following the announcement, the stock fell by a further 14.53% in the after-hours to reach $0.1600.
The holding company, OneSmart International Education Group Ltd. has a market capitalization of $30.24 million. Currently, the company has 188.71 million shares outstanding in the market. Furthermore, the stock has lost 35.47% in the past five days and a huge 94.79% last year. The current year-to-date loss of the stock is 53.22%.
ONE’s ADS Ratio Change
On Friday, the company announced to change its one ADS from representing 40 Class A ordinary shares to 1,000 Class A ordinary shares. Resultantly, the ADS holders will face the same effect as a one-for-twenty-five reverse ADS split change in the ADS ratio. Further, on the opening of trading on January 24, 2022, the ratio change’s effect is expected to take place on the ADS trading price on the NYSE. Hence, the ADS holders of record on the effective date would be required to yield their ADS to the depository bank for cancellation and exchange. The depository bank will automatically issue and exchange the then-held 25 ADSs with one new ADS.
Instead of issuing fractional new ADSs, the depository bank will aggregate and sell the fractional entitlements to new ADSs. After cutting fees and expenses, the depository bank will distribute the net cash proceeds from the sale of the fractional ADS entitlements to the applicable holders.
In addition, ONE expects the ADS price to increase due to the ratio change. Also, the company does not guarantee the price reaching the same or above twenty-five times the ADS price before the change.
NYSE Notification to ONE
On January 10, the company announced the reception of NYSE Regulation for being in non-compliance with Section 802.01E. According to the non-compliance notification, ONE has failed to timely file its Annual Report on Form 20-F for the year ended on August 31, 2021.
In addition, the letter also stated that NYSE will be monitoring the company for up to six months from the due date of the annual report. Upon the failure to submit the report within the six months, NYSE may choose to either give an additional six months to ONE or suspend and delist the company, upon its discretion.
The company was unable to file the form by December 30, 2021. According to the company, this is because of its independent registered public accounting form change for the fiscal year in question. Moreover, the company is working on the process of filing the 2021 Form-20-F as soon as possible.
