NYSE Asks NovaStar to Explain Recent Stock Surge

December 4, 2007 No Comments »

After shares of NovaStar surged 69 percent Monday, the NYSE requested a public statement from the struggling mortgage lender regarding any recent corporate developments.

Stock for the Kansas City-based subprime mortgage lender closed at $3.33 on Monday, up 69 percent from Friday’s close of $1.97, which was up 50 percent from Thursday’s close of $1.31.

Just two weeks ago, NovaStar Financial reported a third-quarter loss of $598 million and said its shares faced a “high likelihood” of being de-listed from the New York Stock Exchange.

The lender also warned of a possible bankruptcy if the company failed to extend a waiver with Wachovia Corp expiring November 30, which could lead to the outstanding balance becoming due immediately.

That time has now passed, and NovaStar has not disclosed if it received the waiver from Wachovia.

NovaStar spokesman Dick Johnson said company policy is to not comment about market activity, but said the lender would release a statement in the time allotted by the NYSE.

In August, NovaStar shuttered its wholesale division, leading to 500 layoffs, and one month later announced that it would cut 275 jobs and close 12 of its 16 retail loan origination offices.

NovaStar’s operations now consist of managing a mortgage securities portfolio and running a retail brokerage.

It was one of the top 20 subprime mortgage lenders last year, originating more than $10 billion in home loans, according to Inside Mortgage Finance.

Shares of NovaStar dropped on the news, falling 80 cents, or 24.02%, to $2.53 in afternoon trading on Wall Street Tuesday.

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