BearingPoint Trying to Renegotiate Debt
Troubles continue to mount for McLean's BearingPoint. The management and consulting firm said late on Wednesday that efforts to sell itself, or parts of its business, had gone nowhere and that it will now look to renegotiate the terms of some of its debt with lenders in order to comply with New York Stock Exchange regulations.
The credit crunch has made it a difficult environment for mergers and acquisitions, and that has hampered BearingPoint's plans to sell parts, or all, of the company, to pay down its debt load and boost its share price.
The company received a notice from the exchange Tuesday that it had fallen below the exchange's requirements to maintain a minimum market capitalization of $100 million. Earlier this year, the company received a similar letter from the exchange that its share price had fallen below the minimum requirement of $1 per share. The exchange could cease trading in BearingPoint shares if the company does not meet both of these requirements.
The announcement was the latest in a series of struggles for the company since it was spun off from accounting giant KPMG in 2001. In 2005, BearingPoint said it would have to restate earnings as far back as 1999.
BearingPoint said Wednesday that it is looking to boost its stock price by asking shareholders at their annual meeting, on Dec. 5, to approve a reverse stock split, turning every 10 to 50 BearingPoint shares into one and so boosting their price by such a multiple.
The measure would not, however, address the problem of the firm's market capitalization, essentially the value that investors place on the company. BearingPoint has about $690 million worth of convertible debt on its books. The company said restructuring some of that debt could help boost its share price. But whether its lenders will agree to the move is far from clear.
"At present, we have no indication of what, if any, terms may be acceptable for any such restructuring and we can give no assurance that any of our existing convertible debt can be restructured or exchanged for equity in the near term or at all," BearingPoint said in its statement.
BearingPoint's shares were trading at 22 cents this morning and the company had a market cap of $49.9 million.
April 15 looms as a deadline for the company. On that date, some of the company's lenders have the option to require BearingPoint to pay back in full $200 million worth of debt, plus interest.
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