With Cumulus Media shares at just 34 cents a share, and Cumulus stock below the necessary $1 threshold to remain listed on Nasdaq for more than month, an expected delisting notice from the stock market has been received by the beleaguered radio company.
Cumulus received the notice on March 21; word of the delisting did not surface until late Monday (3/27), when an 8-K filing made with the SEC by Cumulus spelled out the details.
The notice came following the company’s March 16 release of its Q4 and full-year 2016 results.
Specifically, Cumulus is not in compliance with Nasdaq Listing Rule 5550(b)(1), based upon the stockholders’ equity continued listing standard.
As was reflected in the company’s 2016 Annual Report on Form 10-K, Cumulus’ stockholders’ equity as of Dec. 31, 2016 no longer exceeded the $2.5 million minimum listing requirement for the Nasdaq Capital Market.
The notice also indicated that Cumulus did not meet the alternative continued listing standards of either a market value of listed securities of at least $35 million, or net income from continuing operations of at least $0.5 million for the most recently completed fiscal year, or two of the three most recently completed fiscal years.
The decline in stockholder equity, and Cumulus’ net income from continuing operations, resulted from the recognition of one-time non-cash impairment charges, primarily related to goodwill, of $605 million and $584.9 million during 2016 and 2015, respectively.
Absent either of these impairment charges, Cumulus would be in compliance with the rule.
The Nasdaq compliance letter has no immediate effect on Cumulus’ Nasdaq listing or trading of the company’s Class A common stock. However, Cumulus has 45 calendar days (or, until May 5), to submit a plan to regain compliance with the rule.
If a plan is submitted and accepted, the company may be granted an extension of up to 180 calendar days from the date of the notification letter to evidence compliance with the rule.
Cumulus says it is “evaluating available options for an appropriate plan to regain compliance with Nasdaq’s continued listing standards. There can be no assurance that the company will submit a plan or, if submitted, whether Nasdaq will accept the Company’s plan to regain compliance, or that the Company will be able to evidence compliance within any extension period granted by Nasdaq.
If Cumulus can’t regain compliance with Nasdaq, a delisting from the exchange will commence.
Nasdaq’s compliance letter comes following a 1-for-8 reverse stock split conducted in mid-October, designed to further avoid any further delisting concerns.
Had the reverse stock split not taken place, Cumulus shares would presently be valued at $.00425.
If Cumulus were to engage in another reverse stock split, at minimum it would be a 1-for-3 arrangement, based on its present stock value.
A previous warning from Nasdaq regarding a possible delisting came in November 2015.