Monday, August 3, 2015

Yep, EXCO Receives Delisting Notice from NYSE

As expected, the NYSE notified EXCO Resources that it has spent too much time below the buck (stock price lower than $1 for 30 trading days), so it is on notice that it will be delisted if the situation is not remedied within six months.  More specifically:
"Under the NYSE rules, during the six-month period from the date of the NYSE notice, EXCO can regain compliance if the price per share of EXCO’s common shares on the last trading day of any calendar month within such period and the 30 trading day average price per common share for that month is at least $1.00. During this period, subject to EXCO’s compliance with other NYSE continued listing requirements, EXCO’s common shares will continue to be traded on the NYSE under the symbol “XCO” but will have an added designation of “.BC” to indicate the status of the common shares as below compliance."
Look for EXCO to do a reverse stock split to get back into compliance.  Nothing like a 1:10 reverse split (my guess) to take the wind out of an investor's sails, but it has to be done or they end up in pink sheet purgatory.  Shareholders need to approve the move, so it's not going to happen overnight.  The company is still viable as of now, although low commodity prices are kicking its ass.  Clearly, there are many who believe the writing is on the wall for EXCO.

The next negative trip switch is NYSE's minimum market capitalization requirement.  If the value of the equity falls below $50 million, there is real trouble because you can't play games with valuation (a reverse stock split tinkers with the math of the number of shares outstanding and the price, not the overall value of the company).  The current market cap (prior to the release of this news) is $158 million.  We will see what it looks like after the market responds to the news in the morning...

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