Shares of BearingPoint Inc. plummeted more than 30 percent yesterday as investors reacted to news that the Securities and Exchange Commission had begun an informal investigation of the consulting firm's accounting procedures and the company's warning that it may run short of cash.
The McLean firm's stock fell $2.49, to $5.28, its lowest closing price in the past 52 weeks.
In addition, the company's debt rating was lowered by Moody's Investors Service, which said that BearingPoint would stay under review for a possible further downgrade.
After markets closed on Wednesday, the company told investors in an SEC filing that the agency had launched the probe and had sent BearingPoint a letter asking for documents related to deficiencies in its internal controls.
The company also said it is planning to try to raise $250 million in a debt offering but told investors that it still may not have enough money to run the business. At the end of March, BearingPoint had a cash balance of $200 million -- not enough to fund its "expected near-term cash needs," according to its filing.
David M. Garrity, an analyst with Caris & Co., said the firm's need for a cash infusion is among its most pressing problems.
"If you don't get any money, you can't operate your business," Garrity said. "The issue here is something that needs to be addressed and addressed soon."
BearingPoint has been plagued with accounting problems. The firm said its financial statements going back as far as 2002 could not be relied upon and that it still can't predict when it will be able to file its audited financial results for 2004.
BearingPoint has been in turmoil since November, when its longtime chief executive, Randolph C. Blazer, abruptly left the company. Last month Harry L. You, a former Oracle executive, was named to the top spot.