How will the merger affect Regional Health Properties' (RHEP) share liquidity and bidâask spread on OTCQB?
Liquidity & BidâAsk Impact
The completion of the SunLinkâintoâRegional merger instantly adds the converted SunLink shares to the public float of RHEP (and its âRHEPAâ warrantâstyle class). In practice this means a modest boost to the number of shares available for trade on the OTCQB, which should ease the chronic thinâtrade environment that has kept the spread relatively wide. Marketâmaker inventories will be refreshed as they receive the new shares, and the higher combined share count usually encourages tighter quoting ââ a reduction of the bidâask spread by roughlyâŻ10â20âŻbasis points is common in similar OTCQB consolidations, provided there is no immediate negative news shock.
Caveats & Trading Takeâaways
Because the OTCQB is still an overâtheâcounter venue, the liquidity improvement will be incremental rather than transformational. If the merger does not materially change the companyâs cashâflow profile, many institutional participants will remain on the sidelines, keeping overall depth modest. In the shortârun (the next 1â2âŻweeks) you may see a temporary widening of the spread as market makers reâprice the combined balance sheet and adjust to any new shareâconversion mechanics. After that adjustment period, expect a narrower spread and slightly higher average daily volume, which can be used to enter or exit positions with reduced execution cost.
Actionable Insight ââŻIf you are looking to add exposure now, the postâmerger window offers a better entry price relative to preâmerger due to the expected spread compression. Place limit orders near the midâquote rather than market orders to capture the narrowing spread, and monitor volume trends for the next 5â10 trading days; a sustained uptick in volume will confirm that the liquidity boost is taking hold. Conversely, stay alert for any regulatory or reporting updates that could reâintroduce volatility and temporarily widen the spread again.