TOKYO Shares of Tokyo Electric Power Co (9501.T) were hit again on Wednesday, sliding as much as 19 percent to their lowest in the company's history, reflecting concern about its long-term viability as it struggles to gain control of a stricken nuclear plant.
Analysts and investors have said the government will likely need to step in to save the utility with a bail-out or full-blown nationalization, although uncertainty remains about the government's intentions for the company.
There is also concern about whether the company, known as TEPCO, would be able to keep its listing on the Tokyo Stock Exchange in the event of nationalization.
"There are a number of options on the table that potentially involve the government taking a larger stake. The unknowns are whether that involves delisting, how large the government stake would be, and the price at which it would take the stake," said Marc Desmidt, chief operating officer at BlackRock Fundamental Equities, Asia Pacific.
TEPCO has yet to determine the extent of the damage it sustained in the March 11 earthquake and tsunami, which knocked out a fifth of its power-producing capacity.
It is still struggling to control radiation leaks and prevent further meltdowns of nuclear reactors at its Fukushima Daiichi plant 240 km (150 miles) north of Tokyo.
TEPCO said on Tuesday it was considering compensation payments to victims of the disaster.
Compensation claims could top $130 billion if the crisis drags on, Bank of America-Merrill Lynch has estimated.
The loss of Daiichi and other plants has also made it hard for TEPCO to meet electricity demand, with power cuts already imposed in some areas and more likely in the summer when demand peaks.
Shares of the company hit a record low of 292 yen on Wednesday, down 19 percent. The previous record was set on Tuesday, when the shares fell below a price set in 1951.
By afternoon shares recouped some of their losses and finished down 7 percent at 337 yen. Investors initially showed little reaction to an announcement by the utility that engineers had stopped highly radioactive water leaking into the sea from its Fukushima Daiichi plant.
While full-blown nationalization could eventually lead to the company's delisting from the Tokyo exchange, the precipitous decline in its value is unlikely to quickly force its delisting, exchange rules show.
After losing 87 percent of its market value since the quake and tsunami ravaged Japan on March 11, the company is still worth 485.6 billion yen ($5.7 billion), according to Thomson Reuters data.
Delisting based on a drop in market value would only be triggered if its worth fell below 1 billion yen for nine months, or if the share price averages less than 2 yen over a period of three months, according to TSE rules.
Even if its shares fell to 1 yen each, TEPCO would still be worth 1.6 billion yen, comfortably above the minimum requirement of the first rule.
However, if the company has a negative net worth for about a year it could also be delisted under the rules.
The firm is more likely to see its credit rating further cut in the near term, analysts have said.
Ratings agency Standard & Poor's last week cut its long-term rating on TEPCO by three notches, to BBB+. If S&P cuts its rating by another three notches, TEPCO's debt would no longer be investment grade, meaning some institutional investors would forced to dump its bonds.
S&P's current rating assumes the Japanese government will shoulder some of TEPCO's compensation costs and that major banks will continue to support the utility, analyst Hiroki Shibata told Reuters on Tuesday. ($1 = 84.900 Japanese Yen)
(Editing by Nathan Layne and Joseph Radford)