The New York Stock Exchange is set to pull the plug on the trading of Suntech Power Holdings’s (NYSE:STP) American depository shares starting Monday November 11, paving the way for the company’s delisting from the exchange. ((NYSE Euronext)) The NYSE said that the move was prompted by uncertainty as to whether Suntech would be able to file its FY2012 annual reports in the given time frame considering its ongoing restructuring proceedings. While the delisting was not entirely unexpected, given that the company had been put under notice by the NYSE for not having filed results, it would nevertheless come as a blow to Suntech and its shareholders. Separately, during the course of the past week, Suntech also agreed to sell off most of its Chinese manufacturing facilities and also filed for a provisional liquidation in the Cayman Islands in order to protect itself from some U.S. creditors.
What Happens Next?
Suntech has not been filing its full quarterly or annual results since Q2 2012 as the company says that it has been a victim of a fraud involving some German bonds that had been pledged to it as collateral. Listed companies are typically required to file their financial results within a stipulated time period, and Suntech was placed on six months notice by the NYSE after it missed a May 1st deadline to file its 2012 annual report. While Suntech has said that the exchange had some flexibility to allow the company’s shares to continue trading for another six months following the notice period, it now seems unlikely that this will happen.  Suntech said in a court filing this week that it intends to release its revised annual reports for FY2010 and FY2011 in February 2014, while its complete results for 2012 and 2013 will be published in March and April 2014, respectively. ((WSJ))
Following a delisting, a company typically has two options to continue the trading of its shares. It can choose to trade on the Over the Counter Bulletin Board (OTCBB) that is offered by the Financial Industry Regulatory Authority or use the Pink Sheets system, both of which are less regulated compared to traditional stock exchanges. In Suntech’s case, it seems more likely that the company will have to go with the Pink Sheet system system following the delisting, since the OTCBB generally requires companies to be up to date in publishing their financial statements. Notes: