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NYSE Suspends Listing of Bonds from Several Bell Companies

July 10, 1985

NEW YORK (AP) _ Investors are in for a surprise when they check the daily New York Stock Exchange bond listing in their newspaper for the price of bonds issued by several former Bell System telephone companies.

The bonds will not be in the list. The exchange has ″suspended further dealings″ in 58 bond issues worth about $11.8 billion from Southwestern Bell Telephone Co., New England Telephone & Telegraph Co., New York Telephone Co., South Central Bell Telephone Co. and Southern Bell Telephone & Telegraph Co.

The exchange disclosed its action in its latest weekly bulletin. It was effective last Friday.

Richard Torrenzano, a spokesman for the NYSE, said the action stemmed from the companies’ failure to pay a continuing listing fee for bonds which the exchange adopted Jan. 1, 1981.

He said the exchange will make a formal application to the Securities and Excxhange Commission to delist the issues.

But the phone companies said investors have no reason to worry about the quality or marketability of their holdings as a result of the NYSE’s action.

Southwestern Bell, based in St. Louis, said it refused to pay $140,000 which it says the stock exchange had demanded for continuing to list about $3.5 billion of its bonds.

Nynex Corp., the New York-based parent of New England Telephone and New York Telephone, said those two companies owed about $116,000 for listing of about $3.8 billion of their bonds.

And Bell South Corp., based in Atlanta, said its South Central Bell and Southern Bell operating companies owed $127,000 for listing about $4.5 billion in their bonds.

The marketability of the bonds is something that worries Emily Obst of Lake Clark Shores, Fla., who discovered this week that some of the telephone bond issues she owns are no longer listed in the NYSE tables printed in her local newspaper.

She telephoned the Palm Beach Post Wednesday to say that she and her husband bought the bonds ″in good faith that there would be a ready market″ for them. She told the newspaper she felt the delisting would ″limit their marketability and therefore reduce their value″ if the bonds were sold before maturity.

But the companies each insisted the exchange’s action to suspend listings should have no impact on the value of the bonds or the ability of investors to buy or sell them.

They said that is mainly because bond trading relies more heavily than stock trading does on the portfolios maintained by individual brokerage houses. They also noted that the delisting had nothing to do with the basic quality of the bonds.

Mel Chase, a spokesman for Nynex, said he would tell individual investors, ″There is absolutely no reason why the delisting should have any effect on your investment at all.″

″The only thing that has changed here is that the bonds are not going to be in the paper,″ said Guy Cochran, operations manager for security financing at Bell South.

He said someone who wants to buy or sell a bond will still have to go to a broker as he would have formerly to make the transaction.

The dispute over the bond listings began several years ago.

Roger Wohlert, assistant treasurer for Southwestern Bell, said the exchange had traditionally charged an initial fee to carry price listings for a particular bond issue.

But he said the exchange decided in 1981 to charge an annual maintenance fee for continuing to list the issue. Wohlert said the telephone companies objected to the yearly fee, arguing that it was not in the original agreement on listing with the NYSE.

Wohlert said most of Southwestern Bell’s bonds are held by institutional investors. He said investment bankers who deal with those investors advised Southwestern Bell that ″there was no need for those bonds to be listed on the NYSE to be traded efficiently.″

Wohlert said Southwestern Bell’s three most recent Southwestern Bell issues were never listed on the NYSE.

″We found the bonds were very marketable and no one seemed to notice the difference,″ he said.

Ironically, the NYSE has repealed the annual fee as part of a review of its pricing on Jan. 1 of this year.

At issue between the exchange and the telephone companies are overdue amounts, the NYSE said.

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