Xechem International Inc. (fka XKEM)

[Eli's Gone]

I posed the following question(italics) to a CPA/banking professional well versed in BK proceedings who has served on equity committees...his response is bolded below...

when a company emerges from Chapter 11 with newly issued shares--how is the share price determined when the new shares begin to trade?...is there a relation to what the old canceled shares trade/traded at?...

also the newly issued shares will total 1B as opposed to the current canceled 3.5B...current shareholders will receive a pro rata distribution of 10%(100M) of the newly issued upon emergence

thanks for any response...hope you and family are well

The price at which the stock will trade will be determined by the market. The old trading price will likley have no bearing on the price of the new stock. This is because after emergence, the balance sheet will likely look different. A new debt structure will impact the earnings, likely positively, because some/all of the debt will now be equity and there will likely be less interest expense. Where it will ultimately trade will depend on many factors like P/E, forward P/E, or some multiple of EBITDA relative to the company's peers. It will be a facts and circumstances driven situation. Post-emergence, stocks have sometimes traded at a discount to their true value because there is still a stigma attached to the name. Eventually that stigma will go away once a few 10-Qs have been issued and the public confidence is restored and the price will tend to gravitate towards its fair value.

Best wishes to you.