Emmis plans to appeal looming NASDAQ delisting

March 5, 2012

Emmis Communications Corp. has failed to comply with requirements to remain on the NASDAQ exchange, but the Indianapolis-based media firm said Friday that it plans another attempt to avoid being delisted from the well-known stock index.

In a public filing, Emmis said it received written notice from NASDAQ on Feb. 28 that it had not regained compliance with the exchange’s $1 minimum-price requirement for continued listing.

NASDAQ served notice to Emmis last Aug. 31 that its stock had closed below the exchange’s minimum $1-per-share requirement for 30 straight business days.  

To regain compliance, Emmis shares needed to rise to the $1 minimum for at least 10 consecutive business days between then and Feb. 27. The stock managed to reach a closing price of 92 cents per share in mid-November but never climbed higher.

Without NASDAQ, Emmis shares would be relegated to penny-stock status on the over-the-counter bulletin board or the pink sheets. Once that happens, shares are harder for investors to buy and sell.

Emmis said Friday that it has requested an appeal before the NASDAQ Hearings Panel, where the company “intends to present a plan to regain compliance with the rule and request that the panel allow the company additional time within which to regain compliance.”

The hearing request is likely to delay a delisting, possibly for more than a month, but there is no guarantee.

“While the company believes that it will be able to present a viable plan to regain compliance, there can be no assurance that the panel will grant the company’s request,” Emmis said.

The company said Friday that it believes it has “tools at its disposal to move the stock above the $1 per-share minimum,” which indicates Emmis likely is considering a reverse stock split to help it regain compliance, said Mark Foster, chief investment officer of Columbus, Ind.-based Kirr Marbach & Co. NASDAQ says stock splits are an acceptable way for companies to regain share-price requirements.

A reverse split should enable Emmis to push its stock price above $1 by reducing the number of company shares without changing the market value of the company.

"I've got to think that's what they're talking about," Foster said. "From a fundamental standpoint, I'm not sure if there's anything else they can do."

Emmis has been on the edge of losing its NASDAQ status for several years. The company was previously warned about possible delistings in November 2010 and in October 2009, but its stock rebounded both times to escape danger.

Shares of Emmis were up 3 cents on Monday morning, to 72 cents each, after falling 1 cent on Friday. The stock has traded below $1 since last July 31.

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