The Morning Report
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Lee Enterprises, the Iowa-based parent company of the North County Times, plans to ask its stockholders for permission to do a reverse stock split to keep the company listed on the New York Stock Exchange.

A reverse stock split turns multiple shares into a single share, increasing its value.

Lee, whose stock value has dropped to .36 cents per share, faces de-listing because its value is below $1. With revenues declining, the company is struggling to pay off $1.4 billion in debt it took on in 2005 to buy the Pulitzer newspaper chain.

Editor & Publisher has details on what the move means:

A reverse stock split would instantly raise the price of Lee’s stock, which has been languishing well below $1 a share for about two months. …

If shareholders approve the reverse stock split plan, the price of Lee, based on Thursday’s price, would increase to between $1.85 and $3.70, depending on what ratio its directors chose. …

In its proxy for the annual meeting, Lee argues that its stock price is depressed by broader market conditions, and that raising the stock price would improve the perception of the stock as better than a speculative investment.

No analyst rates Lee stock a buy, and, one, Tom Corbett of Morningstar has assigned a “fair value estimate” of the stock as “zero.”

ROB DAVIS

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