Shares of C&D have fallen 69.5 percent since Aug. 27, when it closed at 59 cents a share. On Wednesday, shares sank 28.7 percent, or 8.6 cents, to 21.4 cents on heavy volume. By the end of the day, 14.4 million shares had traded, 49 times the average daily volume of 289,000 shares over the last five years.
C&D closed at 18 cents Thursday, down 3 cents or 15.84 percent.
What's going on?
The company did release its second-quarter financial results Tuesday evening, which were largely flat on an operating basis. C&D reported a gross profit of $11 million on net sales of $83.84 million for the quarter ended July 31, compared with gross profit of $10 million on sales of $82.4 million for the same three months a year earlier.
What really got investors' attention was a separate news release that said C&D had entered into a "restructuring support agreement" with two note holders who hold about 56 percent of two different convertible notes. That agreement, filed with the SEC, identified the note holders as Angelo, Gordon & Co., of New York, and Bruce & Co., of Chicago.
Why do the note holders get to call the shots? It all comes back to that falling stock price.
Unlike most penny stocks, C&D shares trade on the New York Stock Exchange. Over the last several months, the NYSE has notified C&D twice that it had fallen below certain listing standards. On July 15, it said C&D could face delisting because its stock price had fallen below $1 for 30 consecutive days.
In an SEC filing, C&D noted that its market capitalization recently had fallen below $15 million and should it stay below that level for 30 consecutive days, the NYSE could seek to suspend trading and begin delisting procedures.
The company said being delisted would be considered a "fundamental change" requiring it to accelerate payment of the principal amounts of its convertible notes. At $127 million, that's an amount C&D can't afford to pay.
Under the restructuring agreement, C&D would cut its total debt from about $170 million to less than $45 million. In return, those note holders would receive up to 95 percent of C&D's common stock, which explains the heavy trading in its stock of late.
Plus, if the exchange of notes for stock doesn't happen, there is the possibility of a "prepackaged reorganization" plan, struck outside of U.S. Bankruptcy Court, or a Chapter 11 filing, the company said.
C&D said it "does not anticipate" any interruption in its operations during whichever path of restructuring it takes. President and chief executive officer Jeffrey A. Graves called the plan a "positive resolution" in a statement.
"The plan significantly reduces our debt level - primarily accrued from past acquisitions and recent losses, which is unsustainable in the current economic climate," he said.
Contact Mike Armstrong at 215-854-2980 or marmstrong@phillynews.com. See his blog at 
