NEW YORK (AP) ¿ Shares of MCG Capital Corp. surged to an annual high Tuesday after an analyst upgraded the commercial finance company's stock and said it should soon be in a position to reinstate its dividend.
Stifel Nicolaus analyst Greg Mason raised his rating to "Buy" from "Hold" with a price target of $6 and said that the company's credit and liquidity should return to "normalcy" by early 2010.
MCG needs to reduce its debt by $87 million to meet lenders requirements, Mason said, estimating that the company currently has $35 million in cash and can meet the remaining obligation by the beginning of next year.
"Once the deleveraging requirements are met, we believe MCGC could be in a position to reinstate its dividend after being forced to eliminate it due to liquidity issues," Mason said.The company suspended its dividend in August 2008 after it was unable to renew a $200 million credit line. Shares of MCG jumped 62 cents, or 17.7 percent, to $4.12 in late afternoon trading after hitting a 52-week high of $4.34 earlier in the session.