Microtec faces TSX suspension

Quebec-based company may look to trade shares on other markets
 - 
Thursday, July 1, 2004

ST-AUGUSTIN, Quebec - Microtec Enterprises is facing yet another financial hurdle.

The TSX Exchange, Canada’s senior market, has issued a notice to the Toronto-based security service provider that its shares will be suspended from trading on June 25.

The move to suspend Microtec stems from the company’s failure to meet the market’s $3 million total market capitalization minimum. The TMC is a number, set as a listing requirement by the TSX, that represents the amount of outstanding market shares a company has on the market multiplied by the current share price.

“In order to remain on the exchange, a company has to meet the minimum limits of $3 million,” said Sylvin Gauthier, the information coordinator with the TSX Exchange. “You can’t go lower.”

Daniel Tardif, communications director at Microtec, said the company anticipated the exchange’s action. “It was something we were aware of,” he said.

Tardif noted that for the past two years, the stock market has been especially challenging for security companies. In an indication concurrent with this, Voxcom, another Canadian security company, recently removed itself from the exchange by repurchasing its common shares. Voxcom returned to conducting business as a private company, citing the high expenses of public life coupled with a lack of trader interest. In contrast, Microtec intends to remain public and may look to trade on other markets.

Until the suspension date rolls around, the company may continue trading on the TSX. If Microtec’s TMC rises above $3 million, it will be allowed to remain on the market. If the TMC does not rise, the business will be suspended. But officials are less than hopeful.

“We don’t expect big movement,” Tardif said.

Microtec stock was trading at 29 cents per share at press time.

Gauthier said there may be additional reasons why the TSX has taken this action, but he would not comment specifically on them. He said the TSX sets limits, such as the TMC, to protect the market’s visibility to investors and listed companies.

“We have to uphold a certain standard for investors to be attracted to invest in TSX listed companies,” he said. “If we lower our standards, investors will not consider our exchange to be so attractive.”

Microtec has taken a number of intiatives in recent months to improve its financial situation.

In May, the firm was involved in negotiations to extend its bank credits and in April, Securex, a financial provider for the security industry, purchased a 19.9 percent stake in Microtec - a percentage that fell short of triggering takeover discussions. Tardif noted the company is currently working on a viable business plan for the future.

“We are looking at many scenarios,” Tardif said. “We are working hard on that now.”