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The eBearing News
October 21, 2003
Hastings Manufacturing
Voluntarily Seeks Stock Delisting
copyright © 2003 eBearing Inc.
Hastings Manufacturing Company (USA) announced it is voluntarily seeking to delist its common stock
and terminate its registration.
Hastings is a supplier of internal engine components, primarily to the automotive
aftermarket in the U.S. and Canada. Its
product lines include ACL brand engine bearings, Hastings piston rings, Zollner domestically-produced pistons,
and gaskets and other products under the ACL brand. Casite brand engine additives are part of the product
mix, through a joint venture arrangement.
The stock, which traded near $20 per share in 1999, has fallen to a recent $4.30, giving the company
market capitalization of only $3.3 million. As of June 30, 2003, Hastings reported a negative net
worth of approximately $5.1 million.
During 2003, short term debt load has skyrocketed
from $5 million to $17.6 million, primarily from its recent cash acquisitions of Ertl Manufacturing
Corp. (Canada) and Syzegy Auto Distribution (Canada), both distributors of internal engine components
across Canada. The acquisitions will add approximately $16 million to yearly sales, currently
at a run rate of $48 million.
Hastings has faced significant challenges in 2003, as bearing and piston ring sales fell by more
than 19% in the second quarter alone. In second quarter, the company said the North American
replacement parts market had softened considerably while automotive OEMs cut production volumes,
squeezing Hastings from both sides. In April 2003, the company laid off 20% of its workforce.
Mark Johnson, Chairman and CEO, explained the move: "After careful consideration, the Board of
Directors has determined that moving to voluntarily delist and deregister our common stock is a prudent
course of action for Hastings Manufacturing and all of its constituents employees, customers, suppliers,
and shareholders. The board examined many factors in making this decision, including the nature of our
shareholder base, recent trading history of our stock and, in particular, the rapidly rising costs associated
with SEC reporting and compliance. The elimination of these expenses should have a positive impact on
our bottom line and will allow us to focus our resources on growth initiatives. Our chief
responsibility is to build Hastings Manufacturing into a leading supplier of internal engine
components, including our own Hastings branded items; however, the board will continue to explore
options to ensure continued trading, liquidity and the creation of value for shareholders."
Insiders -- primarily Mr. Johnson with 214,000 shares -- hold 34% of the outstanding shares, while the
largest independent institutional investor holds only 1.8%. After Mr. Johnson, the largest holding
by an insider is 7,000 shares. On average, 1,000 shares of Hastings change hands each day.
If the delisting is approved as expected, Hastings stock will then trade through the
Pink Sheets (http://www.pinksheets.com).
The Pink Sheets is an independent stock price quotation service run by National Quotation
Bureau Inc. The Pink Sheets does not have a requirement that companies register with the SEC or
remain current in their periodic filings.
While delisting may solve some problems for some companies and significantly reduces the
regulatory load, delisting has significant downsides for both investors and the companies themselves.
The bid/ask spreads are wider, commissions are higher, smaller quantities change hands, analyst
and media coverage is nonexistent, and liquidity is much lower. In addition, brokers may need to
follow Rule 15g-9 which requires them to essentially prequalify potential investors in the
stock, a process which can take days and further limits the pool of possible investors.
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
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eBearing.com ... for everything that moves™
Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
trademarks of eBearing Inc.
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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