Replies to post #301112 on ERHC Energy Inc (ERHE)

[Julius Erving]

"Sorry I stopped reading as soon as you said "reverse split" since I do not believe that will happen."

Q: Is the company considering a reverse split to raise the price of the stock?

The company continues to review all options at this time.

Q: If a reverse split was done would the number of shares the company can issue (currently 3 billion) also be adjusted downward to reflect the split?

Usually, when a reverse stock split is done, companies might elect to keep the number of shares they are authorized to issue at the same amount. Thus, if a company were authorized to issue 1 million shares and before a split had issued 500,000, then carries out a 500:1 split, the shares it can issue will still remain 1 million while the issued shares after the split are then only 1,000.

[kingpindg]

A reverse split does not change...


the value of an investment at the time of the reverse split. In the example, the $22,000 had already fallen to $1,010 at the time of the reverse split.

Basically, the dilution insurance argument boils down to whether one thinks a reverse split will happen or not. If you do, then it's a bad idea. If you don't, then it's a good idea.



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[ssc]

If a reverse split does become necessary it will be fascinating to see how it is rationalized as a good thing.