Metrocall Inc. last week transferred its common stock listing from the Nasdaq National Market to the Nasdaq SmallCap Market in response to falling per-share prices and diluted assets as a result of recent mergers.
William Collins III, Metrocall president and chief executive officer, said the company’s board felt the move was preferable to implementing a 1-for-2.5 reverse stock split, approved by stockholders May 5.
Paul Liberty, Metrocall vice president of investor relations, said the move provided “the least amount of disruption to stockholders.”
To be listed on the national market, public companies must meet two requirements-have net tangible assets of at least $4 million and a share bid price of at least $5. Metrocall missed both. Liberty said the company isn’t able to meet the $4 million requirement because it has acquired eight companies in the last several years, thus diluting tangible assets.
A common tactic taken to avoid a listing on the SmallCap market is a reverse stock split, much like the 1-for-3 reverse stock split initiated by Arch Communications Inc. June 28, following its acquisition of MobileMedia Corp. However, the company’s share price has dropped since then and is now dangerously close to the $5 threshold again, trading at $5.15 at press time.
Metrocall officials expressed confidence that the move would be a temporary one. Metrocall stock was trading at $2.13 at RCR press time.
Meanwhile, Paging Network Inc. is facing dramatic stock woes. The company’s stock has been on a downslide since early July. It fell below the $5 mark Aug. 4 and continued downward steadily to $1.68 at press time. Trading volumes have been in the millions each day.
Adding to the overall negative outlook on PageNet’s financial situation, Moody’s Investors Service downgraded the company’s three senior subordinated note issues totaling $1.2 billion to B3 from B2. It also downgraded PageNet’s $1 billion debt facility to Ba3 and senior implied rating to B1. The outlook on all ratings for PageNet is negative, Moody’s said. The ratings action is the result of a review of PageNet that began in March.
“The negative ratings outlook reflects Moody’s expectation that revenues from PageNet’s traditional paging business are not likely to grow, the task of stabilizing this revenue base has become increasingly difficult while the company transitions to a more centralized mode of operations.”
Further downgrades are possible if PageNet cannot reduce its debt leverage in the next year, Moody’s said.
