The stock of Dana Corp. was buoyed yesterday upon word that the Toledo firm hopes to resolve its credit problems within two weeks. But the share price slumped again before closing at $1.78.
The automotive supplier said creditors temporarily agreed to drop requirements that it maintain a certain credit rating. Its announcement did not address analysts' speculation that the company could be headed into bankruptcy.
The increase of 27 cents a share yesterday from Friday's carnage, when the stock plummeted more than 50 percent to its lowest level in more than 30 years, didn't allay concerns about the Fortune 500 firm's future. Its response was "late and unsatisfying" and appeared to confirm that the company is having problems getting a deal to replace and enlarge existing credit arrangements, said Shelly Lombard, senior high yield analyst for Gimme Credit Publications Inc.
She added: "They are probably still negotiating with their banks, but I can't believe the only issue is the credit rating. Deals don't blow up over ratings. Banks care about operating results."
The stock continued to trade at heavy volumes on the New York Stock Exchange. About 52 million shares exchanged hands, 18 times normal volume, and a total of 140 million were bought and sold in the past three trading days. Previously, typical trading was about 3 million shares a day.
Last week, analysts questioned the Toledo company's available cash, the Wall Street Journal said the firm had hired restructuring adviser Miller Buckfire & Co., and corporate credit agencies downgraded the firm's bonds. The events led analysts to say bankruptcy is a possibility and some to say it is probable. But one analyst said yesterday that the new credit agreements, if completed, would indicate a lower risk of bankruptcy.
Dana officials declined to comment on the speculation or on the reported hiring of Miller Buckfire.
The company stock opened yesterday well above $2 a share, but fell in afternoon trading. Dana last week postponed a decision on paying a quarterly dividend.
Dana, which in December chopped its reported profits for the previous five years by $44 million and faces U.S. Securities and Exchange Commission investigation into possible securities law violations, reported a third-quarter loss of $1.3 billion. The firm is undergoing its second major restructuring in four years.