Down, but out? Featured

6:27am EDT January 30, 2003


OM Group
After somewhat disappointing second quarter 2002 results, OM Group told investors mid-2002 that its business was strong and that all indicators were for a good second half. As a result, its stock continued to trade above $50 per share.

Then on Sept. 19, OM Group warned that its third quarter 2002 results would be slightly lower than prior statements, but that results would still be significantly higher than in the prior year. On Oct. 29, it announced a huge loss, an inventory write-down and a future restructuring. Subsequently, its stock dropped to as low as $8.60 per share. To make matters worse, it was disclosed on Oct. 31 that OM Group’s CEO had sold all his holdings to cover a margin call on some 710,000 shares of OM Group stock that he had used as collateral for a loan. On this news, the stock dropped even further, to as low as $6.12 per share.

Today, although the company has been able to negotiate several of its debt agreements and in November hired Credit Suisse First Boston as a financial consultant for a massive restructuring plan, CEO James Mooney and the company face numerous class action shareholder lawsuits. Accordingly, its future remains questionable.

Advanced Lighting Technologies Inc.
There’s no way to spin it — things look bad for Solon-based Advanced Lighting Technologies Inc. A shareholder lawsuit, a delisting notice and a loan default were some of the lowlights last year for the metal halide lighting fixture maker.

Pending a miracle, it doesn’t look like 2003 will be any better.

Advanced Lighting and its CEO Wayne Hellman were the defendants in a shareholder class action suit last year, which it quietly settled out of court in September for $8.4 million in cash and no admission of wrongdoing by the company. Other details of the settlement were withheld.

About a month later, the company reported that the NASDAQ National Market issued a warning that it would delist the company if it could not maintain a minimum $1 per share price for 30 consecutive days, which, since the warning, it has not done. The company applied to the NASDAQ SmallCap Market for a listing, which gives it until Jan. 21 of this year to meet the minimum bid requirement.

To make matter worse, Hellman was forced to sell 106,400 shares of his stock to satisfy margin loans he took out in 1998. He also took out a $12,789 loan from his company to cover the margin call.

The grimmest development last year was when Advanced Lighting reported it would not be able to pay the $4 million interest payment on its senior notes, putting the company in default. That followed an announcement that it closed the fiscal year with a net loss of $101 million, compared with a scant income of $271,000 for the previous fiscal year.

Hellman said in a news release that a “sluggish economy” was to blame for the loss, and he was “working toward a profitable fiscal 2003.” We’ll be watching.

Penton Media
Much was made of Penton Media’s 2002 downward spiral — extensive layoffs, record corporate losses, closed publications and the threatened delisting of its stock on the New York Stock Exchange after trading dropped below $1 per share. The troubles stemmed from simultaneous hits to the company’s three revenue-generating wings — publications, trade shows and its Web ventures. With the media industry as a whole experiencing dwindling advertising revenue, Penton suffered great losses.

But in recent months, the New York Stock Exchange accepted the company’s proposed business plan for returning to compliance with all of the Big Board’s continued listing standards, allowing it to continue to be listed on the NYSE, subject to quarterly monitoring for progress against goals as outlined in the plan. If Penton fails to achieve the plan’s financial and operational goals, it will be subject to delisting by the Big Board.

Penton’s core publications remain strong in their respective markets. Its SEC filings reveal it has a war chest of cash to carry it through a modest recovery period. But even if it climbs back up, the big question is whether it can ever regain the prominence it had less than two years ago.