Rumors Cause PS Group Stock to Take a Dive : Market: Trading of the company’s shares was halted temporarily on New York Stock Exchange before the firm denied that it was near bankruptcy.

The New York Stock Exchange temporarily halted trading of San Diego-based PS Group’s stock Wednesday after shares fell $2.75 based on what the company later sid were unsubstantiated rumors that the company was near bankruptcy. After trading resumed, the stock rallied to close up $.50 at $16.

In a release Wednesday, PS Group officials said that there “is no truth to the rumor that the company will be filing for bankruptcy in the near future.” PS Group issued the release in response to a New York Stock Exchange request for information on its stock drop.

PS Group also linked the stock drop to holders of short positions in the company’s stock who “have a vested interest in driving the price of the stock down.”

PS Group’s shares traded as high as $72.25 in early 1991 but have fallen steadily over the past year because of problems at the company’s two main businesses, commercial aircraft leasing and a toxic chemicals recycling unit known as Recontek. The company has also been forced to renegotiate its loans after falling out of compliance on some of its debt agreements.

PS Group reported a loss of $23.9 million on revenue of $297.8 million for fiscal 1991.

PS Group, the former parent of now-defunct Pacific Southwest Airlines, has seen its commercial aircraft leasing business badly hurt by the bankruptcies of three airlines that had leased its jets. Of the three, Pan American has gone out of business, and Continental and America West remain tied up in bankruptcy proceedings.

Given the relative glut of used airliners on the market, PS Group executives have said that they intend to eventually quit the leasing business. “We do not foresee leasing any additional aircraft or taking on any additional aircraft,” PS Group President George Shortley said in a 1991 interview.

PS Group has also been hurt by start-up problems that have kept the Recontek’s plant in Illinois from going fully on-line. The company’s stock fell last year after the Illinois Environmental Protection Agency alleged that Recontek’s plant was illegally discharging pollutants. PS Group said Wednesday that the charges have been forwarded to the Illinois attorney general’s, but that no action has been taken.