Trouble at Dollar Thrifty

On Monday, Dollar Thrifty Automotive Group Inc. reported it could be delisted from the New York Stock Exchange because it didn't have the minimum $25 million of capitalization required for a 30-day period ending Dec. 22. NYSE officials are reviewing the company's listing and have declined to comment.

The announcement set off warning bells for employees, management and analysts wondering if the rental-car industry and Tulsa-based Dollar Thrifty can recover. To keep stockholders and the public satisfied, experts say the company has to stay on the exchange and do all it can to reach the $25 million capitalization requirement.

Dollar Thrifty spokesman Chris Payne said the company notified the NYSE on Dec. 23 that it wasn't compliant with Section 803.01B, which requires a company to maintain a minimum average market capitalization in excess of $25 million during a period of 30 consecutive trading days.

In 2008, the NYSE and the Nasdaq Stock Market delisted more than 125 companies. While delisting isn't the end of a company, industry officials say that most employees and executives see it as the beginning of the end. Add that Standard & Poor's and Moody's have lowered Dollar Thrifty's credit rating in the last week and things don't look good.

S&P, which lowered Dollar Thrifty's credit rating to "CCC+" from "B-", said the company remains on credit watch due to exposure to U.S. auto manufacturers, weak earnings and a need for longer-term covenant relief. The company also expects the declining travel market to create greater losses at the end of 2008 than its $30 million loss at the end of 2007.
At least one analyst said Dollar Thrifty could pull through. John Healy, an analyst for FTN Midwest in Cleveland, said the company could resolve the delisting issue with restructuring or refinancing of its debt. "There should be ample opportunity for them to work out a plan with the New York Stock Exchange," Healy told the Tulsa World. "It looks a lot more challenging on paper than it is once people sit down and start talking."

While Healy's optimism is appreciated, restructuring and refinancing debt isn't easy anymore. In the last year, the nation's credit anorexia has only worsened. Dollar Thrifty's business relationship with bailout-seeking Chrysler LLC also does it no favors. The only silver lining for the company may be that with gas prices now at a five-year low, tight-fisted customers are more likely to rent cars again.