Two weeks ago, Equities.com suggestd the possibility that Edmonton-based payday loan provider Cash Store Financial ($CFSF) was on the brink of delistment after a series of setbacks had caused shares of the company to plummet. On Feb 28 that scenario ended up materializing, as the company voluntarily took their name off the New York Stock Exchange to begin trading over-the-counter.
Much as Richard Nixon resigned the presidency in the face of an almost certain impeachment, Cash Store’s delistment can be considered voluntary in only the most literal manner. The company had been trading under a dollar for close to 30 days in addition to its inability to maintain the requisite market capitalization for inclusion on the Big Board; at $8 million, that market cap is well below the NYSE's required minimum threshold of $15 million.
The Canadian company will continue to trade on the Toronto Stock Exchange. However, their re-inclusion on either the NYSE or NASDAQ seems highly unlikely as regulators continue to clamp down on institutions that cater to “unbanked,” or financially disenfranchised customers.
Cash Store, who operate primarily under the moniker Instaloan, have faced difficulty passing muster with Canadian regulators. As is common practice in the unbanked lending sector, Cash Store had been accused of engaging in unfair lending practices that targeted low-income consumers with unreasonably high interest rates.
A week prior, the company released a statement assuring investors they were working to mitigate their ever-increasing woes. They hired an independent team of directors to “carefully evaluate the strategic alternatives available to the company with a view to maximizing value for all its stakeholders.” The company did not say how long the review would take.
On the delistment, Cash Store shed a significant portion of its value. The company lost 23.79 percent of its share price of following the announcement, settling in at just 33 cents a piece, less than a tenth of its 52-week-high of $3.40.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer