The New York Stock Exchange (NYSE) has given Ambac Financial Group 10 days to respond to a notice issued late Wednesday warning the bond insurer it could be delisted for failing to maintain a minimum share value of $1.00 for the 30 trading days ending Dec. 8.

Ambac is the holding company of Ambac Assurance Corp. The NYSE notified David Wallis, president and chief executive officer of Ambac Financial, that it would be delisted if share prices don’t average more than $1.00 for a 30-day period within the next six months.

Company stock fell 3.66%, or three cents, to close at $0.79 per share Thursday.

Ambac has not decided what steps will be taken to boost its stock price, but according to Peter Poillon, managing director of investor relations, “the most likely option” would be a reverse stock split, whereby the volume of outstanding shares would be reduced and the value of remaining shares would be lifted.

For example, if Ambac used a one-for-10 ratio, the 287.6 million of outstanding shares would be reduced by 10 times to 28.8 million, driving the value of remaining shares from $0.79 to $7.90.

The Wisconsin Insurance Commissioner’s Office, which regulates Ambac Assurance Corp., would not need to approve the move, Poillon added, as the decision only concerns the holding company.

However, Christiaan Brakman, director of media relations at NYSE Euronext, said an act of financial engineering alone won’t resolve the situation.

“It’s not as simple as pushing a button and cranking the share price up. They need to present a credible plan to the exchange,” he said. “If that’s not forthcoming or not convincing then we won’t accept that plan and they will be delisted.”

In the event that Ambac does get the boot, the company would either find another exchange or be traded in the over-the-counter market.

Syncora Holdings, parent of bond insurance rival Syncora Guarantee, began OTC trading one year ago when the NYSE suspended the company for failing to maintain an average market capitalization of $75 million. Its stock value had also fallen well below the $1.00 mark.

For now, Ambac will continue to be traded on the NYSE so long as it meets other listing requirements, including capitalization, revenue, stockholder, and trading volume levels.

The company held a surplus of about $856 million at the end of the third quarter but has warned its liquidity could dry up by early 2011. Ambac does currently meet other NYSE requirements, Brakman said, but the exchange has considerable flexibility should it choose to delist the company.

“If we don’t think a company merits ­being listed anymore, for whatever reason be it quantitative or qualitative, we will delist them at any time,” Brakman said. “So we can suspend and delist the company today if we feel it’s warranted – if they are about to go bankrupt or whatever the reason may be.

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