Weidai Stock (WEI): 1-For-5 Reverse ADS Split Goes Into Effect

By Amit Chowdhry ● Jan 26, 2022
  • A one-for-five reverse ADS split of Weidai Ltd. (NYSE: WEI) has gone into effect. These are the details.

Weidai Ltd. (NYSE: WEI) — a leading auto-backed financing solution provider in China — had announced that it will change the ratio of its American depositary shares (ADSs) representing its Class A ordinary shares from one (1) ADS representing one (1) Class A ordinary share to one (1) ADS representing five (5) Class A ordinary shares. 

The effect of the ratio change on the ADS trading price on the New York Stock Exchange (NYSE) will take place at the opening of trading today. This change supersedes the original plan of three-to-one ADS ratio change as disclosed in the press release issued by the Company on January 13, 2022.

For Weidai’s ADS holders, the change in the ADS ratio will have the same effect as a 1-for-5 reverse ADS split. And there will be no change to the company’s Class A ordinary shares. The ADS holders of record on the effective date will not be required to take any action in connection with the ADS ratio change. The exchange of every five (5) then-held ADSs for one (1) new ADS will occur automatically with the then-held ADSs being canceled and new ADSs being issued by the depositary bank, in each case as of the effective date for the ADS ratio change. Weidai’s ADSs will continue to be traded on the NYSE under the symbol “WEI”.

No fractional new ADSs will be issued in connection with the change in the ADS ratio. Instead, the fractional entitlements to new ADSs will be aggregated and sold by the depositary bank and the net cash proceeds from the sale of the fractional ADS entitlements (after deduction of fees, taxes and expenses) will be distributed to the applicable ADS holders by the depositary bank.

As a result of the change in the ADS ratio, the ADS price is expected to increase proportionally, but the company can give no assurance that the ADS price after the change in the ADS ratio will be equal to or greater than 5 times the ADS price before the change.

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.