Paul Allen boosts the High Speed Access IPO
redherring.com
By Gracian Mack
Redherring.com
June 8, 1999
High Speed Access Corporation (Nasdaq: HSAC) soared in its first day of trading on Friday, closing more than 56 percent higher than its $13 strike price, at $20.38.
And why shouldn't it have done well? When the Denver, Colorado-based company offered 13 million shares of common stock to the public, it offered a man with a Midas touch as its pitchman: Microsoft (Nasdaq: MSFT) cofounder, now venture capitalist, Paul G. Allen.
Mr. Allen's venture capital firm, Vulcan Ventures, has tied High Speed into its ever-growing array of Internet and cable holdings. Before the offering, Vulcan owned 54.2 percent of High Speed. If Mr. Allen's reputation as a sage of business technology isn't enough, consider this obvious benefit to High Speed: Charter Communications, the seventh-largest cable system in the United States, is also owned by Vulcan.
High Speed provides fast Internet access via cable modem to residential and commercial end-users in so-called "ex-urban" (low-income) areas. According to High Speed's prospectus, Charter has agreed to provide exclusive access to at least 750,000 homes. In return, Charter will receive certain considerations to purchase more stock and will control most of the business direction of High Speed.
Vulcan's interests will be represented on the High Speed board of directors by William Savoy, a Vulcan company man that has been a director at High Speed since 1990. Mr. Savoy's ties to Mr. Allen are thick. Since 1990, Mr. Savoy has been president of Vulcan Northwest and is vice president of Vulcan Ventures, both venture capital funds that are wholly owned by Mr. Allen. From 1987 until 1990, he worked at the cryptic Layered Inc., a company controlled by Mr. Allen, and became its president in 1988. Mr. Savoy serves as a director of CNet (Nasdaq: CNET), Harbinger (Nasdaq: HRBC), Metricom (Nasdaq: MCOM), Ticketmaster Online-CitySearch (Nasdaq: TMCS), and USA Networks (Nasdaq: USAI), all Mr. Allen-linked.
GOOD SHOW
High Speed's runaway performance on its first day out of the box indicates that the road-show banter worked well. High Speed garnered strong institutional support through the underwriting management of Lehman Brothers (NYSE: LEH) and J.P. Morgan (NYSE: JPM).
Others lined up to buy shares, in addition to the 13 million sold to the public. Microsoft plunked down $10 million for a stake, Cisco Systems (Nasdaq: CSCO) kicked in $7.5 million for a smaller stake, and Com21 (Nasdaq: CMTO) anted up $1 million for interests of its own. All of these participants gained shares at a discount to the $13 public price.
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