NovaStar Stock Jump Piques NYSE Interest
Monday December 3, 4:51 pm ET
NovaStar Shares Jump 69 Percent 2 Days Before Possible Delisting, Attracting NYSE Interest
KANSAS CITY, Mo. (AP) -- Shares of NovaStar Financial Inc. jumped 69 percent Monday, two days before the New York Stock Exchange was to consider delisting the troubled mortgage lender.
The Kansas City-based company's shares gained $1.36 to $3.33.
The increase was enough to arouse the stock exchange's interest, with exchange officials asking the company what was fueling the rise. The company has not made any public announcements in more than two weeks.
NovaStar officials declined to comment Monday.
"The company's policy is not to comment on market fluctuations," said spokesman Richard Johnson.
NovaStar, whose shares traded at $105.80 at the beginning of the year, has struggled as rising interest rates and falling home prices led more people with shaky credit, or "subprime" borrowers, to default on their loans. This, in turn, scared off investors who bought the loans in the secondary market.
The NYSE told NovaStar in October that it planned to delist the company's shares because the company was out of compliance with the exchange's requirements. NovaStar has asked the company to reconsider at a Wednesday hearing but acknowledged last month a "high likelihood" that it would have to find a new market for its shares.
The NYSE's move came a month after NovaStar said it was terminating its status as a real estate investment trust because it determined it could not pay investors a required dividend.
Under the stock exchange's rules, the company would then have to list its shares as a regular corporation, but the NYSE told NovaStar that it didn't qualify because of its market capitalization and other factors.
