Probe Puts Hold on PS Group Stock : * Finance: Investigation of waste-treatment plant, operated by a subsidiary, forces a halt to firm’s trading on New York exchange.
Trading of PS Group stock was halted on the New York Stock Exchange Friday after the company announced that a hazardous-waste treatment site operated by its Recontek subsidiary was being investigated by the Illinois attorney general’s office for possible violations of environmental laws.
PS Group shares were last traded Friday at $45.25, down $.75 for the day, when trading was halted about noon. Trading did not resume before the market closed Friday. On Thursday, PS Group shares jumped $3.25 to $46 per share for reasons the company said it could not explain.
PS Group ownes 81% of Recontek, which faces fines of up to $25,000 per day if found guilty of the violations. The plant in Newman, Ill., has been permitted to remain in operation, however. The investigation of the Recontek plant is being done at the behest of the Illinois Environmental Protection Agency.
PS Group, a San Diego holding company that formerly was the parent of Pacific Southwest Airlines, has owned a majority share of stock in Recontek since 1989. The facility treats a variety of hazardous metallic wastes from the electronics, automotive and metal plating industries, and features unique treatment technology.
The Recontek plant now provides little or no revenue to PS Group, but Wall Street’s optimism about its future helped boost PS Group stock to a June high of $72.25. Partly because of Recontek, PS Group caught the attention of investor Warren Buffett, whose Berkshire Hathaway investing unit now owns a 22% stake in PS Group.
But rumors of impending fines or a possible shutdown of the Recontek plant have sent PS Group shares plummeting since June. Although the company first disclosed in April that the Illinois EPA had cited it for violations, rumors did not begin to swirl until summer about a possible closure of the facility.
In a statement Friday, PS Group chief executive George M. Shortley said his company was “pleased to note” that the Illinois EPA indicated it “seeks only the payment of fines for any alleged violations” and not the closure of the plant.
Violations cited by the Illinois EPA at the Recontek plant included failure to install secondary containment system beneath all overhead piping and unauthorized storage of wastes in an unpermitted tank. The violations at the Recontek plant were alleged to have occurred in the first three months after the plant opened in November, 1990.
PS Group has been in discussions with the Illinois EPA office in hopes of having some of the violations dismissed when it learned through an EPA press release on Thursday that the case had been turned over to the state attorney general’s office for prosecution, PS Group General Counsel Dennis O’Dell said Friday.
In June, PS Group canceled a scheduled 1.5-million secondary stock offering that was to have raised up to $70 million. But the cancellation had nothing to do with the Illinois EPA investigation of Recontek, O’Dell said Friday. The stock offering was called off because of “volatility in the stock price.”