Friday was the first day of trading of CHHP under that new symbol and on the Pink Sheets market after the common stock of the company could not comply with NYSE continued listing requirement to maintain a market cap of not less than $15 million on 30 consecutive trading days. Though the company’s declared intention to appeal the delisting, CHHP stock lost another one third of its value and closed at a new 52-week bottom at $0.16 for a share on a trading volume of nearly 3 million shares.
The market has not been optimistic about CHHP and the future of their business over the last months, but since the latest quarter report was filed in the middle of last month the shares have reached the bottom several times. Further more, it looks like the downgrade to the Pink Sheets may make the company declare bankruptcy due to its large debts.
CHHP had at the end of July around $158 million in long-term debt, mostly in the form of convertible notes. According to the conditions of that loans, the company would be required to purchase these notes at their principal amount if a “fundamental change” occurs. Since the switch of the stock exchange is such a fundamental change, CHHP appears to be facing a severe liquidity problem with its about $130 million in current assets.
The stock seems to have no chances to recover for now, but CHHP staying in business looks like an even harder task for the management. On the large losses and the low operating margins reported recently, a survival beyond the next twelve months depends on the successful restructuring of the capital structure, for which the company has entered into a restructuring support agreement with certain holders of the convertible notes.
