For months now, throughout the stock-options backdating scandal, Nasdaq has been handing out delisting warnings to companies that fell behind on their SEC filings.
In a large majority of the cases, Nasdaq has been granting those companies exceptions, and allowing them to continue to trade.
But every once in a while, Nasdaq decides to make an example of one of them. Ergo, Comverse (NASDAQ:CMVT), the communications equipment company known best for the once-fugitive former CEO Kobi Alexander, now in custody in Namibia pending an extradition hearing, announced this morning that it is being de-listed from Nasdaq effective tomorrow.
The company notes that one result from the move to the pink sheets is that holders of the company’s $419, 647,000 of Zero Yield Puttable Securities due May 15, 2023 and New Zero Yield Puttable Securities due May 15, 2023 - a former of convertible bond known as ZYPS - will have the right to require the company to repurchase them at 100% of the principal amount. As of October 31, Comverse had $1.87 billion in cash and short-term investments.
Comverse contends the decision “will not affect our ability to continue providing outstanding products, technology and service to our customers worldwide. We are committed to regaining compliance with all filing requirements and obtaining re-listing of our common stock in a timely manner.”
Daniel Ives, an analyst at Friedman Billings Ramsey, said in a note yesterday that the move is a “major negative jolt” for the stock, and notes that some investors are prohibited from owning stocks traded on the pink sheets. That said, he contends the break-up value of the company would be $23-$27 a share - and that the delisting makes the sale of the company more likely. He rates the stock Market Perform, with a $20 price target.
Yesterday morning, Comverse was down 72 cents at $19.22.
CMVT 1-yr chart