International fast dining company Cosi Inc (NASDAQ:COSI) has been notified by the Nasdaq exchange that its shares will be delisted from the stock market in accordance with its listing rules.
Shares of the Cosi, which is in bankruptcy proceedings under Chapter 11, fell 20.17% yesterday to $0.06. On September 28, the stock touched a 52-week low of $0.03 after Cosi notified its intention to enter Chapter 11.
Cosi Inc (NASDAQ:COSI) warns on trading of its shares
Cosi warned that subsequent to its delisting from the Nasdaq, its shares may trade as an OTC security (or the Pink Sheets) on condition a market maker applies to sponsor the security.
The company is going through the bankruptcy process using Debtor-in-Possession financing of $4.1 million.
“This was a difficult step, but it was necessary to address our liquidity issues,” said Patrick Bennett, Sr., interim CEO of Cosi, Inc. “… We believe this process will allow the Company to right-size its balance sheet, reduce its debt, and focus on improving the business and stabilizing the brand.”
The company explored, but was unable to implement, various alternatives to declaring bankruptcy. These included raising fresh capital, taking on new debt, sale of the company as a whole, sale of only certain assets, and restructuring strategies.
Since these were not found feasible, the board of Cosi ultimately came to the unanimous decision to enter Chapter 11.
Cosi Inc (NASDAQ:COSI) and other restaurants: victims of their own high prices?
Data from The NPD Group last month showed that high prices of lunch had killed traffic during that part of the day. Lunch normally accounted for 33% of food traffic but restaurants had been losing lunch customers for two quarters. Higher lunch prices had reduced business, the NPD found.
“The rise in employees working at home and more shopping online, which cuts down on foodservice meal and snack breaks, have been contributors to the softening of lunch traffic and recent menu price hikes have steepened lunch visit declines,” the NPD also said.
Restaurants’ profitability has also been dented by rising minimum wages in many states, and an overall tighter labor market that made it increasingly difficult to find food service workers.