Nasdaq Could Delist Developer’s Stock
Bolsa Chica developer Koll Real Estate Group said Thursday that Nasdaq officials are threatening to remove its stock from Nasdaq’s National Market list because losses have driven the firm’s net worth below $4 million.
A delisting would make it harder and more expensive for investors to trade the company’s already battered stock, which fell 6.25 cents to close Thursday at 31.25 cents per share.
The threat comes as Koll Real Estate Group is trying to complete a deal that would erase a $200-million debt in return for giving the debt holders a 90% equity stake in the company.
The restructuring is needed so the company can borrow money to begin residential construction on the bluffs above the environmentally sensitive Bolsa Chica wetlands in Huntington Beach.
The company’s growing debt load caused a $6.7-million fourth-quarter loss and dropped its net worth below the $4-million level required by Nasdaq for listing.
Nasdaq’s final decision on removing Koll Real Estate Group is on hold until it decides an appeal filed by the company, a process that could take 30 days, the company said.
The developer argues that it shouldn’t be delisted while it tries to complete its financial restructuring, which would put it back in compliance with Nasdaq rules.
Company executives will meet with Nasdaq officials April 23 to explain why they believe the exchange should continue to list the company’s stock, said Raymond J. Pacini, the company’s chief financial officer.
Once the debt is wiped out, Pacini said, the company would borrow about $25 million to help it build 2,400 homes on a mesa north of the Bolsa Chica wetlands. After a 20-year battle with environmentalists, Koll agreed in February to turn the wetlands over to the public for restoration and preservation. In return, it gained approval to develop the homes on the mesa.
Pacini said holders of about 70% of the company’s bonds have said they would be willing to trade their debt securities for stock. Among the bondholders are Bank of America, Merrill Lynch Asset Management and CS First Boston.
Koll Real Estate Group expects to issue a prospectus containing details of the debt-for-equity swap by the end of April and to complete the transaction by mid-year, Pacini said.
If the stock is delisted by Nasdaq, it would continue to be traded on Nasdaq’s over-the-counter bulletin board or on the National Quotation Bureau’s pink sheets, the company said in a statement.
“If for some reason we can’t persuade Nasdaq to change its mind--and I really think we can--it will only be a temporary condition,” Pacini said. “We expect to complete the recapitalization in the late second quarter or early third quarter.”
