The New York Stock Exchange said yesterday that it will suspend trading of Prime Retail Inc. because the share price of the Baltimore company has languished below $1.
"The exchange's action is being taken in view of the fact that the company remains below the NYSE's continued listing criteria" and had a 30-day average share price of less than $1, the NYSE said in a statement.
The stock will be suspended by Thursday, or earlier if the company begins trading in another securities market, the exchange said.
Prime Retail said yesterday that it expects its shares to trade on the over-the-counter market - but not before Thursday.
"We expect by then, or shortly thereafter, to have made arrangements with a market maker under the National Association of Securities Dealers," said Glenn D. Reschke, chief executive officer.
"All it means is that our stock will trade through a different vehicle. Simply that. It does not affect the operations of this company or its financial health."
Prime Retail, the nation's largest owner of outlet shopping centers, had been struggling to control debt and last year found itself on the brink of bankruptcy. Its stock has lost 97 percent of its value in the last two years; it closed yesterday at 20 cents per share.
At the company's annual meeting Aug. 21, shareholders had approved a 10-for-1 reverse stock split by an 86 percent majority, a move that was subject to board approval.
Prime Retail had hoped the move would increase its stock value above $1 per share, so it could avoid being de-listed. But at a subsequent meeting, the board of directors decided against approving the stock split, Prime said yesterday.
Even with a reverse stock split, the per-share price of the company's common stock would trade at a level much less than 10 times its current per-share price and result in a substantial loss for shareholders, Prime said. The board also felt the split would not guarantee that the company would be able to meet the NYSE's listing requirements.
"The board felt the risk of that loss in shareholder equity exceeded the value of remaining more liquid by remaining to be traded over the stock exchange," Reschke said.
Despite the NYSE's announcement, Prime faces no further threat of bankruptcy, thanks to the December sale of four centers and a financing package including a $90 million loan, Reschke said. "We're in far better shape today than we were this time last year," he said.
Shareholders were told last month that the company hoped eventually to become profitable by paying down loans, promoting and rehabilitating its outlet centers, selling pieces of its portfolio and even closing money-losing centers, if necessary.
Prime, which owns and manages 45 outlet centers in 25 states and Puerto Rico, also had planned to continue to defer paying shareholder dividends. Dividends on preferred stock have been in arrears for more than six consecutive quarters, and the company said yesterday that preferred stockholders will meet Dec. 6 in Baltimore to elect two directors to the board of directors.
The meeting was called at the request of one of the preferred stockholders.