NovaStar Financial asked to explain jump in stock price
By DAN MARGOLIESThe Kansas City Star
The Kansas City-based subprime mortgage lender responded publicly that its policy is not to comment on unusual market activity.
The company’s stock price leaped $1.36 Monday, closing at $3.33, after more than 7.2 million shares changed hands — about six times the stock’s normal volume over the last three months.
Shares of NovaStar began 2007 at $106.60, after adjusting for a reverse stock split.
The unusual trading activity came three days after a waiver deadline set by Wachovia Corp., NovaStar’s principal lender. The bank had previously agreed to waive a $150 million net worth requirement for NovaStar until Nov. 30.
Neither NovaStar nor Wachovia has said whether the bank has agreed to extend the deadline again. NovaStar has indicated it may be forced to file for bankruptcy if the waiver is not extended.
As of Nov. 13, NovaStar owed Wachovia $83.9 million in short-term loans and $11.8 million in commitment fees, according to regulatory filings.
NovaStar last month reported a $598 million third-quarter net loss, its largest quarterly loss ever.
The New York Stock Exchange has threatened to delist NovaStar’s stock because the company no longer complies with the exchange’s requirements.