Good Harbor easily raised as much money as it wanted by selling stock to investors and received offers for up to $90 million, according to Sheridan. Hedge funds bought about 95 percent of the stock offered by Good Harbor, not unusual in the blank-check business world.
$50 million to spend
By Steven Syre, Globe Columnist
April 25, 2006
Richard Clarke has $50 million burning a hole in his pocket.
Clarke, the former White House security adviser who criticized President Bush for a lack of focus on counterterrorism prior to Sept. 11, 2001, isn't really alone in that circumstance. He is joined by the former chief executives of two Billerica technology companies that sell big-ticket security and detection equipment, among a few others at Good Harbor Partners Acquisition Corp.
Their business was created recently as a ''special-purpose acquisition company." More informally, those entities are known as blank-check companies that raise money as shell corporations and then use the cash to purchase real operating businesses. In this case, Clarke and his colleagues have been given a blank check to buy security-related businesses.
Good Harbor Partners Acquisition Corp. raised $58 million in an initial public stock offering last month and placed more than $53 million of it in a trust. Now the company will search for a business to buy and must acquire something worth at least 80 percent of the trust, about $42 million. It could buy a business with an enterprise value of up to $160 million.
But all the money in the trust goes back to investors if the company can't make a deal within 21 months, or even less time under some circumstances.
Blank-check companies have a history as suspect investment propositions on Wall Street. But more than a dozen have raised money with the help of well-known underwriters like Citigroup Inc. and Deutsche Bank in the last year, and more are on the way. A few involve well-known figures like Apple Computer cofounder Steve Wozniak, who is chief technical officer at Acquicor Technology Inc., a blank-check company that raised $150 million last month.
Clarke, Good Harbor's chairman, has lots of high-profile experience in the world of security and counterterrorism. But is he the right guy to buy a company? ''I get paid a fairly good top dollar consulting to business," Clarke says. ''We all bring an understanding of both the government and the business world."
As a shell, Good Harbor Partners is little more than a collection of executives working from Boston to Washington today. Chief executive Ralph Sheridan, once chief executive of American Science & Engineering Inc., and president Tom Colatosti, formerly chief executive of Viisage Technology Inc., work from the Boston area. Clarke, the chairman, and four other executives operate from Washington, D.C., and another works in New York.
So what, exactly, are they searching for? ''We're looking at areas where the virtual world converges with the physical world in security," says Sheridan. That means areas like information technology security and software that can make video monitoring more effective.
''Our focus is not homeland security but global security, with an emphasis on commercial accounts where security is a critical part of their business," Sheridan says. ''While everyone on our team has a lot of experience with homeland security, expenditures by governments are episodic and come in bubbles."
Good Harbor easily raised as much money as it wanted by selling stock to investors and received offers for up to $90 million, according to Sheridan. Hedge funds bought about 95 percent of the stock offered by Good Harbor, not unusual in the blank-check business world.
Hedge-fund managers are attracted to blank-check IPOs partly because they believe many privately owned businesses command a lower value than comparable public companies. Owning shares in the blank-check shell allows them to capture that gap between valuations for private and public companies. Once an acquisition takes place, the blank-check company looks like the operating venture with the advantage of a publicly traded stock.
Good Harbor has all the cash it needs. Finding a good way to spend it may turn out to be the harder part.
Steven Syre is a Globe columnist. He can be reached at syre@globe.com.
© Copyright 2006 Globe Newspaper Company.
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