Oi warned over non-compliance with NYSE ‘Penny Stock Rule’

13 May 2020

Cash-strapped Brazilian telco Oi – which is in the midst of a judicial reorganisation process – has received notice from the New York Stock Exchange (NYSE) that it is not in compliance with the NYSE’s continued listing standard that requires that the average closing price of a company’s listed securities not fall below USD1.00 per share for any consecutive 30 trading-day period. Under NYSE rules, Oi has a period of six months – from the receipt of the NYSE notice – to regain compliance with the minimum share price requirement. As a result of temporary relief granted to the NYSE by the Securities and Exchange Commission (SEC), this period was tolled from 21 April 2020 until 30 June 2020; as a result, Oi must regain compliance prior to 22 December 2020. During the interim period, Oi’s American Depositary Shares, each representing five Oi common share, will continue to be listed and traded on the NYSE, subject to the company’s compliance with other NYSE continued listing requirements.

The SEC defines Penny Stocks as follows: ‘The term Penny Stock generally refers to a security issued by a very small company that trades at less than USD5 per share. Penny Stocks generally are quoted over-the-counter … Penny Stocks may, however, also trade on securities exchanges, including foreign securities exchanges … Penny Stocks may trade infrequently, which means that it may be difficult to sell Penny Stock shares once you own them. Moreover, because it may be difficult to find quotations for certain penny stocks, they may be difficult, or even impossible, to accurately price. For these, and other reasons, Penny Stocks are generally considered speculative investments. Consequently, investors in Penny Stocks should be prepared for the possibility that they may lose their whole investment (or an amount in excess of their investment if they purchased Penny Stocks on margin).’

Brazil, Oi