Finova Down 16%, Continues To Hit Lows On Lack Of Deal
By ANNE BRADY
Of DOW JONES NEWSWIRES
PHOENIX -- Shares of Finova Group Inc. (FNV) hit an all-time low of $2.50 Tuesday, continuing a steady decline this month from $7 a share on Oct. 2, as nervous investors await news of a cash infusion, merger or other bailout alternative.
The company has delayed releasing earnings until Nov. 14, by which time executives have said they hope to have news about their progress exploring strategic alternatives.
Jim Kassebaum, vice president of corporate communications at Finova, said it appears that investors remain concerned about the length of time it's taking for Finova to put together a deal to turn things around.
At mid-afternoon on Tuesday, Finova shares were down 50 cents, or 16%, at $2.63 on volume of 2.4 million shares. Average daily volume is 1 million.
Finova trading volume has been heavy the past two days. The stock closed Monday down 12.3% at $3.13.
On Friday, Finova was mentioned in news coverage of reports from Merrill Lynch & Co. and Salomon Smith Barney about corporate bond "blowups." The reports concerned corporate bonds that quickly and sharply fall in value. Finova was cited as an example of a company with bonds that sank due to weakness in the company's loan portfolio.
On Oct. 12, Standard & Poor's lowered ratings on various Finova units. In August, when Moody's Investors Service downgraded Finova debt ratings, the stock hit a then 52-week low of $6.50, but analysts at that time said the market overreacted. Analysts could not be reached for comment Tuesday.
Earlier this month, Finova Chief Executive Matt Breyne told Dow Jones Newswires he is "disappointed" with the length of time it is taking to make a deal to shore up his financial services company and regain access to low-cost capital.
Possibilities being explored include a sale of the company, a sale of equity to a major investor or investors that generates a cash infusion, or the sale of divisions.
Analysts have observed that a sale of the company, once thought to be the best alternative, appears less likely as more time passes. The company first announced five months ago that it had hired Credit Suisse First Boston Corp. to help it study strategic alternatives.
-Anne Brady, Dow Jones Newswires; 602-258-2003 |
