Syntroleum Corp. may face stock market delisting after another net loss
BY ROD WALTON World Staff Writer
Tuesday, November 13, 2012
11/13/12 at 4:16 AM
Biofuels producer Syntroleum Corp. reported yet another net loss for the third quarter and can't seem to get its share price over $1, but the Tulsa-based company hasn't had to enact its emergency plan to avoid delisting from the stock market.
But that time may be coming soon, one investor said Monday.
"They're really close to being delisted" from the Nasdaq Capital Market, California investor Anthony Chen said. He pointed out that Syntroleum shareholders earlier this year approved a "reverse stock split" plan that would decrease the number of outstanding shares to buoy the company above $1 in the case of an imminent delisting.
"They're not going to let that happen," Chen said, adding his disgust with company leadership over its performance. "It's garbage."
Syntroleum reported a $1 million net loss for the three months ending Sept. 30. The bottom line was affected by a $5.7 million loss over nine months ending June 30 for the joint venture Dynamic Fuels production plant.
Karen Power, principal financial officer at Syntroleum, told investors and analysts Monday that the company recently asked the Nasdaq for another 180-day extension of its compliance period following a June 8 letter threatening delisting. She added that the company meets listing requirements other than the $1 minimum bid price.
"We expect the request to be granted, but if it is not we intend to trigger the Nasdaq internal appeals process," Power said. "This should give us sufficient time to effect a reverse split, which has been approved by our shareholders, to get us into compliance."
Dynamic Fuels LLC, a partnership with Tyson Foods Inc. to produce renewable diesel from animal fats and greases, has ramped up production but also has been dogged by mechanical issues. Syntroleum CEO Gary Roth defended the Geismar, La., plant's operations during a Monday conference call with analysts and investors.
"When the plant runs, it runs at design," he said. "Our issue has been downtime with associated equipment."
Dynamic Fuels has sold 63 million gallons of renewable diesel, jet fuel and other products since starting operations in November 2010. So far this year the plant produced about 26.5 million gallons, or about 47 percent of design capacity, according to the earnings release.
Syntroleum has reported only one quarterly profit - $6.9 million for the three months ending June 30 - since 2010. It has logged annual net losses in three of the five previous years.
"It's been a really rough ride," said Chen, who got into Syntroleum stock a few years ago. "It's hard to get out."
Syntroleum's share price last reached $1 on May 1, but the most recent closing at or above that value was April 25. Nasdaq has previously threatened Syntroleum with delisting, but not lately.
A reverse stock split, for example, could turn five shares into one, technically elevating the price if not the value of the entity.
Tulsa financial adviser Jake Dollarhide said uncertainty has clouded Syntroleum's future for years.
"Syntroleum is, in a word, an enigma," said Dollarhide, CEO of Longbow Asset Management Co. "The ultimate hope is that what they're doing with Tyson will produce multiple other joint ventures."
Time will tell. Dynamic Fuels has gained marketing deals with Mansfield Oil Co. and Norfolk Southern Corp., but consistent production and profits seem elusive so far.
Both leadership and shareholders may be cautiously hopeful that Congress will consider reinstating the $1 per gallon biodiesel tax credit, which expired late last year.
"Who knows what Congress is going to do?" Chen said.
Dollarhide wondered whether Syntroleum can hold out long enough to see the Dynamic Fuels venture through to fruition.
"Your larger partner is not as desperate as you," Dollarhide said, referring to Springdale, Ark.-based meat processing giant Tyson. "That's not their core business."
He also predicted that delisting may be only days away - which, of course, would trigger the reverse split.
Original Print Headline: Biofuels producer may face delisting
Rod Walton 918-582-8457
rod.walton@tulsaworld.com
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