Dana Holding Corp., once one of Toledo's largest and most stable companies, will ask its shareholders in eight weeks to trade 10, 15, or even 20 shares of their current stock for a single share so that the company can remain listed on the New York Stock Exchange.

Dana will ask its shareholders to accept the reverse stock split at its annual shareholders meeting, planned for April 21 at Detroit Metropolitan-Wayne County Airport.

The action, disclosed by the company this week, follows the company's notice in December that it had been warned that it could be removed from NYSE listings because its average closing stock price over the previous 30 days had fallen below $1. The auto parts maker was given six months to raise its average share price above $1 or delisting procedures would begin.

"Typically, the market doesn't like this, because they view it as kind of a mechanical trick" to keep their stocks above the $1 threshold, said Nejat Seyhun, a professor of finance with the Ross school of business at the University of Michigan.

Mr. Seyhun said reverse stock splits "unfortunately are becoming quite common" as a way for companies to comply with listing requirements. "But the economic fundamentals [of the company] are not changed. It doesn't solve any of their fundamental issues. It doesn't solve why they are here."

Dana spokesman Chuck Hartlage said the company could not comment on its stock performance.

The stock of the Fortune 500 firm closed above the $1 level on three consecutive trading days in January and on three consecutive trading days in early December. Otherwise, the stock has consistently closed below $1 - and traded as low as 34 cents a share - since Nov. 17. Yesterday, the shares closed at 37 cents.

In a filing with the U.S. Securities and Exchange Commission, Dana argues that executing a reverse stock split "will not impact the market value of our company as a whole, although the market- value of our common stock may move up or down once the reverse stock split is effective."

It asks shareholders to allow Dana's board of directors to determine whether the stock should be exchanged at a rate of 10-for-1, 15-for-1, or 20-to-1, with any resulting fractional shares converted to cash.

Even at the most aggressive reverse split option, the resulting single share of Dana stock if executed yesterday would have a market value of $7.40, or about 3 percent of the value of the company's closing share price on Feb. 1, 2008, its first day of trading after Dana emerged from Chapter 11 bankruptcy protection.

The company's common stock was distributed at that time to debt-holders of the company, and the share value at that time was pegged at $22.

Mr. Seyhun, the professor, said the "choice" Dana's board is seeking could give clues as to how severe they view the company's downturn.

"My guess is that the bigger the split ratio, the more the negative reaction from the market," he said. "If they do a 20-for-1 split, that means that they're worried that the price could continue to slide and they don't want to be in this situation again, so they're going for a bigger split ratio."

Dana, which makes axles and other parts for cars and trucks, has about 29,000 employees worldwide, including about 1,000 in metro Toledo.

The company is expected to post sales for 2008 of $8.2 billion, down from the $9.2 billion in 2007 that placed it No. 283 on the Fortune 500 list.

Its 2008 earnings are scheduled to be released on March 16.

Contact Larry P. Vellequette at:

lvellequette@theblade.com

or 419-724-6091.

First Published February 27, 2009, 1:55 p.m.