Enservco Corporation Provides Update Concerning Non-Compliance with NYSE American Listing Standards
Enservco (NYSE American: ENSV) announced that NYSE Regulation staff has decided to delist the company from the NYSE American exchange due to failure to meet the required $6 million stockholders' equity by June 9, 2024. Enservco plans to appeal this decision and submit a remediation plan to address its equity deficit. During the appeal process, Enservco's stock will remain listed and traded. The company's Updated Plan includes securing a $10 million equity line of credit, converting $2.2 million in convertible notes to equity, and completing the acquisition of Buckshot Trucking with an issuance of $1.25 million in equity. Enservco aims to meet the NYSE American standards to avoid delisting, although there is no assurance of successful compliance.
- Enservco plans to secure a $10 million equity line of credit.
- The company has converted $2.2 million in convertible notes into equity.
- Enservco is completing the acquisition of Buckshot Trucking , issuing $1.25 million in equity.
- The stock will continue to trade during the appeal period, ensuring liquidity for shareholders.
- NYSE Regulation has initiated proceedings to delist Enservco due to failure to meet the $6 million stockholders' equity requirement.
- The company's Updated Plan is not guaranteed to succeed, risking potential delisting.
- If delisted, Enservco’s stock could lose significant value, adversely affecting shareholders.
- The appeal review period may take several months, prolonging uncertainty for investors.
Insights
The announcement from Enservco Corporation about its non-compliance with NYSE American listing standards is significant for investors. The company's failure to meet the minimum $6 million of stockholders' equity affects investor confidence and the stock’s market performance. While the company plans to appeal the decision and has outlined a series of measures to address the equity deficit, the uncertainty during the appeal review period presents risks.
Enservco's immediate efforts, such as securing a $10 million equity line of credit and converting existing notes into equity, indicate a proactive approach. However, these actions might not be sufficient unless they are executed flawlessly and quickly. Investors should be cautious of the inherent risks of delisting, which may lead to reduced liquidity and possibly lower stock prices. Additionally, the company’s reliance on seasonal frac heating business implies variability in revenue, which might further complicate its financial recovery efforts.
Understanding the implications of a potential delisting is crucial. A delisted stock might face reduced visibility and investor interest, impacting its market value. Retail investors should consider the risk of trading in a stock that might be relegated to OTC (Over-The-Counter) markets, where transaction volumes can be significantly lower.
From a legal perspective, Enservco's situation involves substantial compliance and regulatory aspects. The NYSE American's decision to commence delisting proceedings shows the importance of adherence to listing standards. The company's right to appeal and the subsequent review by the Listings Qualifications Panel introduces a period of legal and operational uncertainty.
The appeal process itself, which could take several months, will be critical. The company's ability to present a convincing Updated Plan to the Panel will determine the outcome. During this time, the stock remains listed, but investors must understand the potential for delisting if the appeal fails. This could lead to significant ramifications, including reduced market liquidity and possible investor losses.
Investors should also be aware of the legal implications of the company's strategic initiatives, such as the acquisition of Buckshot Trucking LLC and rationalizing assets. These actions, while aimed at meeting equity requirements, could involve complex negotiations and regulatory approvals, adding another layer of risk.
Enservco's update on its NYSE American listing status sheds light on the broader market dynamics affecting such companies. The oil and gas sector, especially service providers like Enservco, faces significant volatility. The company's focus on well-site services in both conventional and unconventional oil and gas industries ties its fortunes to the cyclical nature of oil prices and exploration activities.
Enservco's attempts to mitigate its equity deficit through financial maneuvers, including securing an equity line of credit and converting debt to equity, align with common strategies in the industry. However, the company's ongoing reliance on seasonal businesses may be a point of concern. The strategic move to reduce dependency on seasonal frac heating indicates a long-term shift but could pose short-term operational challenges.
Retail investors should note that while these measures aim to stabilize the company's financial position, the overall market conditions and sector-specific factors play a critical role. Understanding these broader trends can provide context to the company's current challenges and potential future performance.
LONGMONT, Colo., June 10, 2024 (GLOBE NEWSWIRE) -- Enservco Corporation (NYSE American: ENSV) (“Enservco”, or the “Company”), a diversified national provider of specialized well-site services to the domestic onshore conventional and unconventional oil and gas industries, today announced that the staff of NYSE Regulation has determined to commence proceedings to delist the common stock of Enservco from the Exchange. NYSE Regulation has determined that the Company is no longer suitable for listing pursuant to Section 1009(a) of the NYSE American Company Guide (the “Company Guide”) as the Company was unable to attain a minimum of
The Company has a right to a review of staff’s determination to delist the common stock by the Listings Qualifications Panel of the Committee for Review of the Board of Directors of the Exchange (the “Panel”).
Enservco plans to request a hearing to file an appeal with the Panel and to submit a cure of its equity deficit (as required, between the notice and hearing dates). The hearing date will be set by the Panel and the Company will communicate that date to the shareholders when established. Following such appeal, a decision by the Panel will be made and announced by NYSE Regulation regarding either proceeding with suspension and delisting or continued trading in the Company’s common stock. During the appeal review period, the Company’s stock will continue to be listed and traded on the NYSE American exchange.
The Company’s planned resolution of its equity deficit (the “Updated Plan”) includes a series of components, some of which are outlined below. The Company’s management believes these actions will satisfy the stockholders’ equity requirement and allow it to remain listed on the NYSE American exchange.
- The Company has entered into a terms sheet for a
$10 million equity line of credit and expects to announce the entering into definitive agreements for the equity line of credit within 48 hours. - Rich Murphy and Cross River Partners, L.P., has now converted its
$1.2 million November 2022 convertible note and also the aggregate of$1.0 million of its September and October 2023 convertible notes into equity. - The Company is continuing to actively explore other components to its Updated Plan. This includes completing the financing for its previously announced acquisition of Buckshot Trucking LLC which includes, amongst other terms, the issuance of
$1.25 million of equity. - Last, the Company is continuing to explore strategic initiatives to rationalize its assets and reduce reliance upon the seasonal frac heating business.
The Company understands that the Panel’s appeal review period may take up to several months. Enservco plans to execute the Updated Plan to attain the required
Enservco’s receipt of such notification from the NYSE American does not affect the Company’s business, operations, or reporting requirements with the U.S. Securities and Exchange Commission, nor does it suspend the trading of the Company’s shares on the NYSE American during the appeal review period. However, if the Company does not appeal this determination, NYSE American will announce the date that trading will be suspended.
ABOUT ENSERVCO
Enservco provides a range of oilfield services through its various operating subsidiaries, including hot oiling, acidizing, frac water heating, and related services. The Company has a broad geographic footprint covering major domestic oil and gas basins across the United States. Additional information is available at www.enservco.com. On March 20, 2024, the Company announced an agreement to purchase Buckshot Trucking LLC, an energy logistics provider in multiple key oil and gas basins (the “Buckshot Acquisition”). The Buckshot Acquisition is scheduled to close in the third quarter of 2024. When closed, the Buckshot Acquisition would provide Enservco with a growing business that is not weather dependent, allow the Company to enter steady year-round logistics, provide an expanded operating footprint, and improve cash flow visibility.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This news release contains information that is "forward-looking" in that it describes events and conditions Enservco reasonably expects to occur in the future. Expectations for the future performance of Enservco are dependent upon a number of factors, and there can be no assurance that Enservco will achieve the results as contemplated herein. Certain statements denoting future possibilities, are forward-looking statements. The accuracy of these statements cannot be guaranteed as they are subject to a variety of risks, which are beyond Enservco's ability to predict, or control and which may cause actual results to differ materially from the projections or estimates contained herein. Among these risks are those set forth in Enservco’s annual report on Form 10-K for the year ended December 31, 2023, and subsequently filed documents with the Securities and Exchange Commission (“SEC”). Forward looking statements in this news release that are subject to risks related to, among other things, completion of the equity line of credit transaction, closing of the Buckshot Acquisition on anticipated terms and timing, and the ability of Enservco to successfully integrate Buckshot’s market opportunities, personnel and operations and to achieve expected benefits. Enservco disclaims any obligation to update any forward-looking statement made herein.
CONTACT
Mark Patterson
Chief Financial Officer
Enservco Corporation
mpatterson@enservco.com
FAQ
Why is Enservco (ENSV) being delisted from NYSE American?
What is Enservco’s Updated Plan to avoid delisting?
Will Enservco stock continue to trade during the appeal?
What happens if Enservco's appeal fails?
How long might the appeal review period for Enservco last?
