Delisting on rise as market declines

The economic cyclone that is the recession is hitting publicly traded firms in lots of different ways.

Some aren’t selling as many products to consumers or have had corporate clients scrap infrastructure upgrades, and others are caught in the housing sector bust.

That’s pulled the various stock indexes down this year, hurting a broad array of securities. But for firms already in trouble for reasons not easily or entirely blamed on current economic conditions, the recession has only worsened matters —- leading to delistings from major exchanges.

Five Georgia companies have been delisted this year. Spectrum Brands’ exit from the New York Stock Exchange was the most recent; the other four had traded on the Nasdaq. Their shares are all now available over the counter, which is a legitimate form of buying and selling but more speculative.

That makes a turnaround all the harder, experts say.

“If you’re delisted your stock is normally considered to be more speculative in nature,” said Jeff Busse, an associate professor of finance at Emory University’s Goizueta Business School. Companies could raise money by issuing more shares but they wouldn’t get much, he said. Or they could borrow money but likely would pay higher interest rates because the firms aren’t as valuable.

Nasdaq this year delisted 83 firms through Dec. 16, up 72 percent from all of 2007. The NYSE delisted 42 firms through Nov. 30, double the entire figure for 2007.

“It’s not a good thing. Institutional investors lose interest in the stock and market makers lose interest,” said Bill Sherman, managing director of VRA Partners, an Atlanta-based investment bank that focuses on mergers and acquisitions for midsized companies and private equity firms.

“If you had a choice, you’d rather not be on the Pink Sheets. It’s a last resort,” Sherman said.

Here is the current standing of Georgia’s five delisted firms:

SPECTRUM BRANDS

(Atlanta)

Ticker: SPCB.PK on OTC

Shares outstanding: 52.8 million

Delisted from: NYSE on Dec. 22

Cause: Failed to maintain a minimum average share price of at least $1 for 30 consecutive trading days and a global market cap of at least $25 million for 30 trading days. The consumer products company, maker of Rayovac batteries and Remington shavers, was unable to sell a key unit it said would have enabled it to pay down part of its total debt of $2.52 billion.

Stock Price/Market Cap: 10 cents per share/$5.28 million.

Outlook: For the quarter ending Dec. 31, analysts expect a loss of 26 cents per share.

ATHEROGENICS (Alpharetta)

Ticker: AGIXQ.PK on OTC

Shares outstanding: 39.5 million

Delisted from: Nasdaq on Oct. 14

Cause: Chapter 11 filing. Under pressure from lenders, the maker of a failed heart drug sought bankruptcy protection because of its debtload of more than $300 million.

Stock Price/Market Cap: 15 cents per share/$5.93 million.

Outlook: For the year ending Dec. 31, Wall Street expects a loss of $1.39 per share.

OMNI FINANCIAL SERVICES

(Atlanta)

Ticker: OFSI.PK on OTC

Shares outstanding: 11.1 million

Delisted from: Nasdaq on July 22

Cause: Failure to file timely periodic reports with the Securities and Exchange Commission. The company, parent of Atlanta-based Omni National Bank, said it couldn’t file its reports on time because its auditing of its financial statements were incomplete. Further complicating the audit’s completion was the appraising system used in determining the value of real estate owned by the bank following foreclosure.

Stock Price/Market Cap: A nickel per share/$566,760.

Outlook: In general, Wall Street expects banking stocks to remain under pressure as financial institutions remain in defensive modes against more recession-driven losses.

VERSO TECHNOLOGIES

(Atlanta)

Ticker: VRSOQ.PK on OTC

Shares outstanding: 93.3 million

Delisted from: Nasdaq on May 8

Cause: It met none of the conditions of a Nasdaq regulation that requires a minimum of $2.5 million of stockholders’ equity, or a $35 million market value of listed securities, or $500,000 of net income from continuing operations for the most recently completed fiscal year or two of the three most recently completed fiscal years.

Stock Price/Market Cap: 0.0002 cents per share/$18,660.

Outlook: Unclear. The company, which makes software that helps telecommunications service providers optimize bandwidth and reduce costs, filed for Chapter 11 bankruptcy protection in April.

VYYO

(Norcross)

Ticker: VYYO.PK on OTC

Shares outstanding: 18.7 million

Delisted from: Nasdaq on March 26

Cause: Failure to maintain a market cap of at least $50 million for 10 consecutive trading days to be listed on the Nasdaq Global Market index. The company, which provides bandwith expansion products for cable companies, shed wireless and other operations as it sought to restructure in a highly competitive field.

Stock Price/Market Cap: 12 cents per share/$2.24 million.

Outlook: Unclear. The company said in October that it would suspend the filing of reports.