The New York Stock Exchange has suspended trading of The Container Store’s shares and initiated delisting proceedings against the home decor retailer, according to a Monday press release.
The NYSE said The Container Store’s stock fell below its listing standards, which require a market capitalization of $15 million for 30 consecutive trading days. According to a regulatory filing with the U.S. Securities and Exchange Commission, The Container Store said that it would not exercise its right to appeal the delisting decision. The NYSE plans to remove the company’s listing and registration on Dec. 23.
The stock exchange first warned The Container Store in May that it risked delisting after its stock fell out of compliance with listing rules. The company’s board of directors approved a 1-for-15 reverse stock split as one measure to combat the delisting in August.
In the second quarter, The Container Store’s net sales fell 10.5% from a year ago to $196.6 million.The retailer’s net loss for the quarter narrowed to $16.1 million from $23.7 million a year ago.
“As you know, we have faced challenges due to softening demand and increased price sensitivity affecting our financial performance,” Jeff Miller, The Container Store’s CFO, said during a second quarter earnings call in late October. “In addition to the significant expenses incurred as a part of our review of strategic alternatives and refinancing of our credit facilities, all of which have placed pressure on our ability to comply with the leverage ratio covenant in our term loan facility.”
Earlier in October, The Container Store adopted a poison pill to limit the influence of a large stockholder who had accumulated over 18% of the company’s shares. Later that month, the retailer and Beyond Inc., announced they planned to pursue a strategic partnership. Under the deal, Beyond, parent of Bed Bath & Beyond, Overstock and other brands, would invest $40 million in The Container Store in exchange for a 40% equity stake.
In late October, the company issued a going concern statement and said in a regulatory filing that it would explore scaling back, discontinuing part or all of its operations or seeking bankruptcy protection if the equity deal with Beyond falls through or if it’s unable to secure a transaction to obtain additional liquidity, refinance its credit facilities or reach an agreement with lenders to amend its credit terms.
That’s due in part to Beyond's equity deal being contingent on The Container Store’s ability to refinance or amend its borrowing terms with lenders. In November, The Container Store filed a regulatory statement indicating that the agreement was in jeopardy due to an inability to meet the previously announced financing terms. Beyond issued a similar statement a day earlier, saying that if The Container Store is unable to obtain acceptable financing for the deal by Jan. 31, either party may terminate the purchase agreement.
