Risk & Compliance

Dollar Thrifty Is First Firm to Get NYSE Market-cap Break

Big Board, under pressure to hold onto its shrinking firm, sees this as one of a dozen that could benefit from a threshold relaxation to $15 millio...
Stephen TaubJanuary 27, 2009

The New York Stock Exchange, which had announced a temporary relaxation of its listing requirements in light of the rapid market-capitalization decline of many of its listed firms, applied a new, lower threshold in not delisting Dollar Thrifty Automotive Group shares.

The Big Board acknowledged that rental car company is one of a dozen or so companies that could benefit from the NYSE’s decision to reduce its listing requirement, which previously called for a $25-million minimum market cap. An exchange official would not identify the other companies that could benefit, however.

Dollar Thrifty acknowledged that it had failed to meet the $25 million minimum market capitalization requirement for the 30-day period ended Dec. 22, 2008. But the company said that the NYSE, in advising the Dollar Thrifty of its decision, had recognized the overall decline in trading prices in today’s volatile markets.

“We are pleased that the NYSE has demonstrated some flexibility on their listing standards during these exceptional times,” said Scott Thompson, president and CEO of Dollar Thrifty.

On Friday, the NYSE announced its temporary relaxation of the market-cap threshold. Through April 22, companies with an average global market cap falling below $15 million over 30 consecutive trading days will be promptly delisted. However, that level is 40 percent lower than the standard threshold of $25 million.

The move “will enable companies of suitable size and quality to remain listed during current difficult market conditions,” said Richard Ketchum, chief executive officer of NYSE Regulation Inc. All of the exchange’s other criteria for continued listing will remain unchanged.

The Big Board explained that because of recent steep declines in trading prices of many securities, the number of listed companies with a market cap below $25 million has grown significantly higher than the historical norm. However, it did not say how many had suffered such a decline.

“The exchange believes that, in many cases, these companies have experienced precipitous stock price declines because of these unusual market conditions, rather than company-specific problems,” it said. It added that it believes that these companies’ market caps likely will increase as the current market turbulence passes.

The NYSE also noted that it has chosen to temporarily lower the listing standard, rather than to impose a complete moratorium on application of the standard, because it continues to believe that companies with market caps deteriorating to a level below $15 million are unsuitable for continued listing on the exchange.