Reverse splits can be absolutely lethal, especially in such cases where management keeps offering secondary shares for the exchange or avoidance of of debt. I have lived through a few of these. They SUCK. This is one reason why I tend to prefer the utility model to Moelis or other plans being considered. The need for uplisting to NYSE is huge because many funds and institutional investors will not touch any OTC stock or any listing below a dollar threshold (usually $5) on a major exchange. But the dilution created can wreak havoc on share value if not managed professionally. THEN the reverse split ploy enters into the equation and the company may benefit but the equity holders pay the price for it.
There is a LOT of conversation on this reverse splitting to retain listing status as it relates to money laundering schemes, investor fraud cases and the collapse of the Bank of Cyprus that seem remote, here, but may be less remote than some would think. Just ask any of us that got caught up in the Newlead Holdings fiasco when Cramer plugged it and it went from $100/sh to $10/sh to $.000001/sh.
On the plus side, I do not think a one-time, modest reverse split for F&F would be totally condemning, and, no, a 1-for-10 like AIG would not be necessary and should not be considered. My best guess is that a release narrative under the utility model being advocated by FHFA would obviate the need for any reverse split to reach listing thresholds.
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