On Wednesday, August 21, Net Serviços? ADR reached the $1 threshold on Nasdaq, falling 16.67% on the day. In São Paulo (Bovespa) the stock gained 10.25% to 0.43 cents of a Brazilian Real. Although Nasdaq would normally delist an ADR that trades for a dollar or less, PAY-TV News has learned that Net hasn?t received a warning due to either low price or low liquidity, and apparently isn?t under any pressure from Nasdaq. Many other issuers are in a similar situation. Nasdaq?s management must be thinking hard before it delists a bunch of ADRs. Moreover, Net has so far submitted quietly to the new rules and audits imposed by Nasdaq. No doubt the crisis in the global telecoms industry has persuaded Nasdaq to be more lenient than in the case of TV Filme, for example, which was delisted a couple of years ago on the grounds of low price and low liquidity. Last but not least, there?s a conspicuous mismatch between the behavior of the stock in São Paulo and the ADR in New York. If they were aligned, the ADR would be worth $1.30 or the stock 0.30 BRL. In any event, this is clearly the worst of times for Net as far as the equity market is concerned. Its market cap in the U.S. is 28 million USD excluding debt and the recent capitalization. In Brazil market cap is about 121m BRL on the same criteria (about 40m USD at the current exchange rate).
Crisis
