The risk of the Grubb & Ellis brokerage being delisted from the New York Stock Exchange could be alleviated with a reverse stock split to be considered next week.
It's a move that will spare some problems for the company's largest investor and chairman of the board, Bloomfield Hills, Mich.-based real estate investor C. Michael Kojaian.
Grubb & Ellis has struggled during the last year, trading below $1 since March and close to being delisted from the NYSE as a result.
In a deal that needs to be approved by the Grubb & Ellis board and stockholders, the company will perform a reverse stock split in which 50 existing shares will be worth one.
Under the deal, the share price will go from roughly 15 cents a share to $7.50.
A proxy statement was filed with the Securities and Exchange Commission with the agenda for the Dec. 29 shareholders meeting, with the reverse stock split on the agenda.
In the proxy statement, the reverse stock split is listed as a way to remain in compliance with the NYSE.
"As required by the NYSE, in order to maintain our listing, we were required to have our average share price return to at least the $1.00 price level ... and through the date of this Proxy Statement, we have not cured this price deficiency," the proxy statement reads.
It would solve the short-term problem of having a share price under $1, a requirement for being listed on the NYSE.
"In addition to bringing the price of our common stock back above $1 to satisfy certain NYSE listing standards," the proxy statement said, "the board of directors also believes an increase in the per-share trading price of the company's common stock will enlarge the pool of eligible investors and increase analyst and broker interest."
Mr. Kojaian and the board of directors for Grubb & Ellis have been working feverishly to save the company.
In October, a deal was announced for New York investor Andrew Farkas to extend a $10 million loan to the company and buy $4 million in existing debt.
After a $69.7 million loss in 2010, Farkas' loan follows an $18 million loan from Santa Monica-based Colony Capital.
Kojaian is the firm's largest investor, owning 22.9 million shares. At the 15-cents-a-share price, his shares are worth $3.4 million. Those 22.9 million shares would be worth $389.3 million in 2007 when the stock was at $17 a share.
This story first appeared in Crain's Detroit Business, a sister publication of Investment News.
