Smith Expected to Stay on NYSE : Official Cites Value to Big Board of Trading in the Stock

In filing a Chapter 11 bankruptcy action Friday, Smith International joined about a dozen other New York Stock Exchange-listed companies whose shares continue to be sold on the world’s most prestigious exchange despite their having sought court protection from creditors.

In the past, companies which filed for bankruptcy, or just suffered too many years of losses, were routinely dropped from the Big Board. But, currently, several bankrupt firms, including A.H. Robins Co. Inc. and Manville Corp., continue to be listed on the NYSE.

Although NYSE officials will review Smith as a result of the bankruptcy action, it is unlikely that the issue, battered as it is, will be dropped from the Big Board, an exchange official said Friday.

Competitive Situation

“In my opinion, they will never delist that company because of all its volume, and the exchange gets its fees based on volume,” the NYSE official said. “They’ll go through and review it and all that, but they won’t delist it.”

Part of the reason for the increased leniency, said Jeffrey Kilpatrick, president of Newport Securities Inc., of Costa Mesa, is the emergence of other exchanges which compete with the NYSE for the commissions generated by large-volume issues.

“The intense competition from the other exchanges, such as NASDAQ and the National Market System is making it much less likely for the big exchanges to drop a stock,” Kilpatrick said. “Why give the volume away to somebody else?”

Trading in Smith shares was halted by NYSE officials Friday just two hours after the opening bell rang, and it remained halted for most of the day while news of the bankruptcy petition was disseminated.

New All-Time Low

Although Smith had lost only 25 cents a share on light volume before trading was halted, by day’s end the issue slid to $1.875 a share, down 87.5 cents for the day on massive volume of 1.1 million shares. Trading resumed less than an hour before the closing bell.

Smith shares hit a new all-time low during the final hour of trading as the price fell to $1.25 a share, before rebounding to $1.875--its previous all-time low.

While trading was shut down on the Big Board, Jefferies & Co. of Los Angeles continued to make a market in the stock. Officials of the over-the-counter firm which specializes in trading NYSE-listed stocks away from the exchange floor, had quoted Smith shares at $1.25 bid and $1.75 asked.

Smith common stock had reached an all-time high of $70.25 a share in late 1980s.