Shiner International is facing delisting from the prestigious NASDAQ exchange if it fails to revive its ailing stock price which has plummeted in recent months and now sits below the minimum level demanded by the US trading body.
The US-registered company, which specialises in flexible packaging for the food and tobacco sectors, has been given 180 days by NASDAQ to turn its stock price around and comply with the minimum bid price of US$1 per share.
Although the firm is registered in the US state of Nevada, its manufacturing operations for coated, BOPP and anti-counterfeit plastics are located in China and run through a series of subsidiaries.
Shiner confirmed it would continue trading even if the delisting goes through.
Its stock price has dropped sharply from around US$1.40 per share 12 months ago to its current level of just under $0.60. In December 2011, the stock price was just US$0.40.
The company told FoodProductionDaily.com that the share price dive had been fuelled by a crisis of confidence in US-listed China stocks from investors brought on in part by a slew of accounting scandals in some of these outfits. The firm stressed it had not been affected by any such scandal.
Problems with the share price date back to last year. On 1 September 2011, NASDAQ sent a formal warning letter to the company noting its common stock had fallen below the $1.00 per share minimum for the past 30 consecutive days required by the stock exchange under Listing Rule 5450(a)(1.
Shiner was given 180 days - until 28 February 2012 – to rectify the problem. However, when it failed to do this, it received a second warning giving it a further grace period of 180 days.
The extension was granted as Shiner continued to meet other NASDAQ conditions – such as the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing the stock exchange, said the firm.
Reverse stock split
The company has also told NASDAQ it would solve the problem by the end of August by carrying out a “reverse stock split if necessary” – by which a company cuts the number of its shares in a bid to increase their value.
Shiner outlined a series of other measures that it plans to take over the next six months to inflate its share price.
“During this period, we will release our 2011 annual earnings report, and make new progress with the current market strategy from the new BOPP line put into production,” the company told this publication. “This grace period provides us with the extension of 180 days to increase our valuation through positive operating results and future guidance to justify our stock trading above the $1.00 threshold for the required period.”
Shiner has acknowledged that if it cannot meet the share price rule it will face delisting – although it has said it may appeal against such a decision.
If this is unsuccessful it said it will continue to trade on the OTC Bulletin Board (OTCBB). An OTC equity security generally is any equity that is not listed or traded on NASDAQ or a national securities exchange.
“Delisting would be significant because we can reach the capital markets through NASDAQ but something we believe we could survive,” said the company. “There are indications that investor confidence is returning to US-listed China stocks.”