Tulsa World: Dollar Thrifty status unclear

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Dollar Thrifty status unclear
Delisting by the New York Stock Exchange is a possibility.

By D.R. STEWART World Staff Writer
Published: 12/31/2008 2:26 AM
Last Modified: 12/31/2008 2:42 AM

For employees of Tulsa-based Dollar Thrifty Automotive Group Inc., it's now a waiting game on whether the company's shares will be delisted by the New York Stock Exchange.

A day after Dollar Thrifty advised the NYSE that its market capitalization didn't reach minimum standards for continued listing on the exchange, various officials said Tuesday that the company could face a bumpy road ahead under the best of circumstances.

"To the extent they are removed from here, they need to make alternate arrangements — (for listing on) the pink sheets or the bulletin board market," said a NYSE veteran who declined to be quoted. "And they need to reassure the public they are a viable company. They need to execute a business strategy going forward and also address liquidity issues — debt covenants, refinancings."

Dollar Thrifty shares closed Tuesday at $1.04 a share, unchanged. Dollar Thrifty has 21.6 million shares outstanding. The company employs 7,000 people worldwide, 700 of them in Tulsa.

Section 802.01B of the NYSE-Listed Company Manual specifies that as a requirement to continued listing on the exchange, a company must maintain a minimum average market capitalization in excess of $25 million during a period of 30 consecutive trading days. A company's market capitalization is its stock price multiplied by the shares of stock outstanding.

Dollar Thrifty failed to meet the minimum market capitalization requirement for the consecutive 30 trading days ending Dec. 22.

President and CEO Scott Thompson is out of town and could not be reached for comment.

Company spokesman Chris Payne said the NYSE is assessing the company's status.

"We can't predict whether or when they will take action," Payne said. "It's a possibility we could be delisted."

Delisting may not be the end of the world for executives and employees of companies threatened with that prospect, but they often feel they can see it from there, industry officials say.

In 2008, the NYSE and the Nasdaq Stock Market have delisted more than 125 companies for not meeting minimum standards. It is the highest total since 226 were delisted in 2003, exchange officials said.

"It involves almost every industry — airlines, funeral homes, retail, restaurants, RVs (recreational vehicle manufacturers and dealers)," said Glenn Tyranski, senior vice president of financial compliance at the NYSE. "The companies we are dealing with are well-known. On the delisting side, we are dealing with extremely high-profile companies.

"The difference between this time and last time (the 2000-2001 high-tech bubble) is who we are talking about — some of the hallmark names of our country and the economy. It's pretty amazing times."

NYSE officials, who are prohibited from discussing issues related to individual companies, agreed to be quoted about trends and the processes of reviewing companies not meeting minimum standards.

A review of a company not meeting minimum standards could take a week or several months, officials said, depending on the circumstances and financial condition of the company.

In Dollar Thrifty's case, two ratings agencies, Standard & Poor's and Moody's, both have lowered the long-term corporate credit rating of the company during the past week.

S&P, which lowered Dollar Thrifty's credit rating to "CCC+" from "B-", said the company remains on Creditwatch with negative implications.

"The downgrade is based on the company's exposure to distressed U.S. auto manufacturers, particularly Chrysler LLC, the need for longer-term covenant relief on its corporate credit facility, and a continuing weak earnings outlook due to pressure on demand, pricing and vehicle residual values, which began earlier in 2008," S&P said in a report last week.

Due to the uncertainty of the economy, the domestic automotive and airline industries and the used vehicle and financial markets, Dollar Thrifty executives said they expect to report a fourth-quarter pre-tax loss significantly greater than the $30.58 million fourth-quarter loss in 2007.

The company also is expecting to report a 2008 pre-tax loss, company executives said.

John Healy, who follows Dollar Thrifty and the rental car industry for FTN Midwest in Cleveland, Ohio, said the company is not far from the NYSE minimum standards and could resolve the delisting issue with restructuring or refinancing of its debt. Healy rates Dollar Thrifty's shares as "neutral," and he estimates the company's fourth quarter and 2008 losses, respectively, at $1.25 and $1.35 per share.

"Dollar Thrifty is a company that has been around for a long time," Healy said. "There should be ample opportunity for them to work out a plan with the New York Stock Exchange.

"It looks a lot more challenging on paper than it is once people sit down and start talking."

D.R. Stewart 581-8451
don.stewart@tulsaworld.com By D.R. STEWART World Staff Writer

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