Embraer announces split of ADSs and changes proportion to 1 common share per ADS
According to Money Times, the proportion will be 1 ADS for 1 common share in November, with credit for three extra ADSs per share.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM MONEY TIMES · 2 MIN
Embraer (EMBJ3) announced on Friday, October 30, a forward split of its ADSs, receipts traded abroad that represent company shares. According to Money Times, the ratio that is currently 1 ADS for 4 common shares will become 1 ADS for 1 common share, with a change scheduled for November.
The change will be made through the Third Amended and Restated Deposit Agreement, the contract that governs the ADS program. According to the schedule informed, the base date is November 9, when registered holders of ADSs will be considered at closing.
Anyone in this condition will receive 3 additional ADSs for each ADS they hold, credited after the trading session on November 13th. In practice, whoever had 1 ADS now has 4, which corresponds to the same 4 ordinary shares as before.
In other words, the change changes the trading unit of the ADSs, and not the number of shares that each holder represents.
What changes for the investor
In theory, a split like this changes the quantity of shares and the unit price of the ADS without changing the economic participation of each holder. The effect on liquidity and quotation, however, depends on the market reaction, which may not follow theory. It is worth monitoring the base date of November 9th and the credit of new ADSs after the November 13th trading session, in addition to confirming with the custodian institution how the credits will appear in the account.
Automatically translated from Portuguese.
