(News & Observer, The (Raleigh, NC) Via Acquire Media NewsEdge) Jan. 10--At least two Triangle companies are being delisted from major stock exchanges, and several more could follow if their fortunes don't improve -- moves with negative ramifications for companies and investors.

Analysts tend to shun publicly traded companies that are delisted for failing to meet minimum exchange requirements, reducing the flow of useful information to investors. There are also fewer investors willing to buy the stock, which can end up depressing prices.

For the companies, meanwhile, being delisted makes it more difficult to raise money by selling stock. It's also a blow to their prestige.

"In general, when a company is faced with a delisting request from the exchange, the company is already in trouble," said Cory Janssen, co-founder of Investopedia.com, an investment Web site.

Shares of companies delisted by stock exchanges such as the New York Stock Exchange and Nasdaq move to over-the-counter services such as the OTC Bulletin Board and Pink Sheets' Electronic Quotation Service.

"It's important for investors to understand that, after a company is delisted, you still own those shares," Janssen said.

Investors who own stock in a company whose stock is delisted should view it as a red flag, especially because it's "a long shot" that the stock will ever regain its listing, Janssen said.

The recession is pushing companies across the country below the exchanges' minimum listing requirements, such as a minimum share price and a minimum market capitalization, or total value of a company's outstanding shares.

In 2008, 54 companies were delisted by the NYSE because they went bankrupt or failed to meet regulatory requirements, up from 21 the year before. Nasdaq delisted 85 companies for regulatory reasons, up from 48 in 2007.

In October, Nasdaq temporarily suspended its rules requiring a $1 minimum closing price and minimum market capitalization because of what it called "the almost unprecedented turmoil" facing the market. The suspension has been extended until April. However, the NYSE hasn't suspended its requirements.

The number of companies facing delisting has expanded so rapidly that the stigma that goes with it may be diminished somewhat, said attorney Don Reynolds of Raleigh's Wyrick Robbins Yates & Ponton.

"Nasdaq's move to suspend delisting is an acknowledgement of this," he said.

All but one of the Triangle companies with delisting issues have fallen below minimum financial requirements set by the stock exchanges:

--Shares of Cary yellow pages publisher R.H. Donnelley were suspended by the NYSE last week because the total value of the company's outstanding stock fell below $25 million over a 30-day trading period. By contrast, Donnelley, which publishes directories in 28 states, had a market capitalization of more than $5 billion in mid-2007.

The NYSE suspension is a precursor to being delisted, an action that must be approved by the Securities and Exchange Commission. Donnelley spokesman Peter Larmey said the company can't discuss the delisting until after it releases its quarterly earnings.

--Durham drug development firm Adherex Technologies announced in December that it no longer meets the listing requirements of the former American Stock Exchange, now the New York Stock Exchange Alternext US. On Friday the company said it would file for delisting with the SEC, and that it expects delisting to occur near the end of the month.

Adherex shares will continue to trade on the Toronto Stock Exchange, however. That will mitigate the impact of the company's delisting, said Scott Murray, senior vice president of corporate development at Adherex.

--Xerium, a Youngsville company that makes equipment for the papermaking industry, said Monday that its shares face delisting for failing to meet minimum NYSE standards for share price and market capitalization. The company has at least six months to bring its share price above $1.

--Canadian phone equipment maker Nortel Networks announced last month that it may be delisted by the NYSE because its stock price is less than $1, but it could keep its listing if the stock bounces back over the next six months. The struggling company, which once employed 8,500 in Research Triangle Park, today has 2,200 workers in RTP.

--AIDS drug company Trimeris, based in Durham, has been cautioned it could be delisted by Nasdaq for failing to have the required number of directors on its audit committee following the resignation of a board member. It has six months to remedy the situation.

--Moissanite gem maker Charles & Colvard, based in Morrisville, received written notice from Nasdaq that it could be delisted because its stock is trading below $1. It has six months to regain compliance.

"It's a drop in prestige and really lowers their investor base dramatically," Robert Bushman, professor of accounting at UNC-Chapel Hill's Kenan-Flagler Business School, said of delisting. "There will be significantly less analyst interest in the stock, because they tend to cover stocks that trade a lot. That's the nature of the beast."

Most institutional investors such as mutual funds won't invest in "penny stocks," including companies that have been delisted, and many individual investors stick to the major exchanges as well.

That lessens the number of potential buyers of the stock and can make it more difficult for investors to sell shares, Reynolds said. Moreover, "if there are fewer buyers, you are not going to get as good a price," Reynolds said.

Delisting also can trigger a sell-off by investors, further depressing the stock price.

david.ranii@newsobserver.com or 919-829-4877

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