A Surprise Ruling Puts Altaba Stock's Future Trading in Limbo

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Blue/Bloomberg A Surprise Ruling Puts Altaba Stock’s Future Trading in Limbo A Surprise Ruling Puts Altaba Stock’s Future Trading in Limbo A Surprise Ruling Puts Altaba Stock’s Future Trading in Limbo

The former Yahoo! will stop trading on the Nasdaq at the close of business on Wednesday, but it’s unclear just where and when trading will resume.

A Surprise Ruling Puts Altaba Stock’s Future Trading in Limbo

The former Yahoo! will stop trading on the Nasdaq at the close of business on Wednesday, but it’s unclear just where and when trading will resume.

https://www.altaba.com/news-releases/news-release-details/nasdaq-halt-trading-altaba-shares-october-2-2019 https://www.barrons.com/articles/altaba-finally-rewards-its-shareholders-but-the-ultimate-payoff-is-uncertain-51569336089 https://www.finra.org/sites/default/files/2019-10/UPC_33-2019_AABA_Altaba.pdf https://www.barrons.com/articles/altaba-investors-may-not-want-to-stick-around-much-longer-51554458401 https://www.barrons.com/articles/altaba-alibaba-stock-liquidating-yahoo-51554304876 mailto:andrew.bary@barrons.com A Surprise Ruling Puts Altaba Stock’s Future Trading in Limbo By Andrew Bary Victor J. Blue/Bloomberg

Altaba will stop trading on the Nasdaq at the close of business on Wednesday, but it’s unclear just where and when trading will resume.

Some investors and analysts had expected that Altaba (ticker: AABA) would start trading over the counter on the Pink Sheets under a new ticker symbol as early as Monday. However, in a surprise move, the Financial Industry Regulatory Authority (Finra) issued a bulletin Wednesday stating that it currently “does not intend to issue an OTC quoting and trading symbol for AABA shares following its delisting from the Nasdaq.”

Altaba had no immediate comment.

The company is due to be delisted from the Nasdaq on Monday. Under its liquidation plan, it plans to file a certificate of dissolution in Delaware on Friday. The Nasdaq plans to halt trading at the close Wednesday, and that halt will last through Friday.

Finra stated in its bulletin that it will be permissible to transfer Altaba shares, or the rights to receive dissolution distributions, in the absence of a ticker symbol, but it isn’t clear now where that trading venue will be.

Altaba has said that it will request that the Depository Trust Co. maintain records representing the right to receive post-dissolution liquidating distributions. One institutional investor says his understanding is there will be quotes from brokers on Altaba after the delisting, but there may not be highly visible markets.

Altaba is the former Yahoo!, which changed its name after selling its internet business to Verizon Communications (VZ) in June 2017. The company’s market value is around $10 billion.

Altaba shares are trading at $19.57, down seven cents. The company made a big distribution of $51.50 a share on Sept. 23 as part of its liquidation program announced in April. Analysts and investors estimate that the company’s current asset value is around $22.50 a share, with nearly all that value consisting of cash and equivalents.

Altaba amounts to an unusual arbitrage situation. There’s uncertainty about the timing and size of future distributions to holders. The company has said it aims to make distribution to holders in late 2020, but that hinges on approval by the Delaware courts, which will oversee the liquidation process. One or more small liquidation payments are expected to follow a large expected 2020 payment.

A Delaware decision likely will hinge on the court’s comfort about the company’s Chinese tax liability.

The company has reserved about $8 billion for potential Chinese taxes on Altaba’s large sales of Alibaba Group Holding (BABA) stock, which had been its most valuable asset. Altaba has received oral notification from Chinese tax authorities that no capital-gains tax levies will be imposed on Alibaba stock sales made in 2018 and Wall Street expects favorable tax rulings on Alibaba stock sales in other years, including 2019.

However, it’s unclear when such rulings may come and whether Delaware courts will allow distributions to Altaba holders based on oral, rather than written, representations by Chinese tax authorities. Altaba has stated that it believes that oral representation will be sufficient for the court to allow the distribution to its holders. In a worst-case scenario, the holdback of funds could last for years, given the current 10-year statute of limitations on such Chinese taxes.

Write to Andrew Bary at andrew.bary@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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