Virginia: Media company behind Richmond casino project facing possible Nasdaq delisting

Urban One, the media company seeking to develop a nearly $600 million casino resort in Richmond, Virginia, was notified on Friday that the Nasdaq stock market has initiated the process to possibly delist the company. The action comes due to the company's failure to comply with financial reporting requirements as mandated by the federal government. 

The notice came on behalf of the Securities and Exchange Commission last week. The SEC announced that the company, which is one of two stakeholders in the second Richmond casino referendum that will appear on the ballot in November, failed to report in a timely manner.

"In general, when a company gets a delisting notice or gets put on notice that they're potentially going to be delisted, that means that it's sort of the end of the line of a series of missteps over the past six or seven months," said Jamie Cox, a Managing Partner with Harris Financial Group, as reported by the CBS 6 News.

Cox further explained that financial reporting procedures are in place to protect investors and their decisions on whether or not to invest in certain companies. "It's an important feature of markets in the United States to have that trust and competence that financial statements are timely filed and accurate," he explained.

According to information on Urban One's website, the first notification of noncompliance from Nasdaq arrived in April when Urban One missed the deadline for filing its 2022 annual financial report. The company then received another notice of noncompliance in May when Uban One missed the deadline for filing its first quarter report of 2023.

The company submitted a plan to Nasdaq in an effort to regain compliance. The plan included filing its delinquent reports by September 27, which was considered an extension. However, Urban One missed that deadline too which prompted the initiation of the delisting process.

For its part, Urban One attributed the reporting delays to accounting errors pertaining to its investment in the failed Richmond casino in 2021 and errors "with regard to the timing of expense recognition of non-cash stock-based compensation."

The company has requested a hearing before the Nasdaq Hearing Panels, which will suspend any delisting action until at least October 20, and the company could be granted an extension through March 23.

According to the above-mentioned media, an Urban One spokesperson said the company was working diligently to complete the filings and regain compliance. "This event does not impact our day-to-day business. We remain in a strong financial position and last week updated our financial guidance for the year," the spokesperson said. "Our commitment to our investors, to our millions of viewers and listeners, and to our Richmond resort casino project remain unchanged."

As to whether delisting could potentially impact the casino project, Cox said it could affect financing considerations and investor confidence. However, he added that it appears the company is taking action to address the concerns. 

In July, after numerous financial issues, the company dismissed BDO USA LLP as its public accounting firm and appointed Ernst and Young in its place with the goal of getting things back on track. 

Based in Silver Spring, Maryland, Urban One owns 72 broadcast stations in 13 markets and operates various syndicated programming. It also has a minority ownership interest in MGM National Harbor, a gaming resort in Prince George's County, Maryland. 

Urban One was the majority partner of the first casino project that ultimately failed to pass in 2021 after Richmonders voted 51-49% to deny the project. Now, two years later, Urban One, in partnership with Churchill Downs, which is responsible for the Kentucky Derby, is trying again.