December 12, 1998
TUNDRA PLANS TO GO PUBLIC
By KEVIN BELL -- Ottawa Sun
Newbridge affiliate Tundra Semiconductor Corp. said yesterday it will take advantage of a recovering chip market to forge ahead with an initial public offering early next year.
The decision to go public comes just two months after Tundra president Adam Chowaniec said the company would delay its IPO until the market is more hospitable to semiconductor firms.
But company officials now say the timing is good.
"We believe the markets will improve significantly by 1999," said Tundra chief financial officer Normand Paquette.
The semiconductor sector is showing signs of a significant rebound, Paquette said. The IPO's underwriters also suggest the timing to raise money on the public markets may be right by early next year, he said.
The company says the IPO will be completed by next March.
Tundra expects to raise "well over $30 million" to be used for research and development in connection with the firm's current and future products, Paquette said. The company and its underwriters are still trying to work out exactly how much the company will try to raise in its offering of public shares, he said.
The money will also be used to help Tundra secure its supply of wafer fabrication capabilities and for general corporate purposes.
Duncan Stewart, who manages the Navigator Technology Fund, said Tundra's change of heart isn't surprising.
"Two months ago, the markets sucked. Now they don't," he said.
"Now is a relatively good time for Tundra to go public. If I were advising them, I'd be telling them the same thing."
Share prices of U.S. chip and semiconductor firms have risen by 30% to 40% in the last few months, he said.
Brian Antonen, an analyst with Research Capital in Toronto, said while Tundra's timing looks good right now, there's some doubt whether the semiconductor market's rebound is sustainable.
"The fact they are doing it is a good sign," he said. "The question I ask is whether this is long-term stuff."
Investors are being buoyed by giant chip maker Intel Corp.'s recent announcement that it will have a good quarter. But Antonen said Intel always does well around Christmas when personal computer sales skyrocket.
Tundra will be the second Newbridge affiliate to go public in just over a year. Earlier this year, CrossKeys Systems Corp. launched an IPO, but investors have not treated the company kindly in a shaky market.
CrossKeys shares were issued at $14.95 and initially rose to $22.50 before sinking to a low of $6.80. They have since recovered to $10.40.
Tundra filed a preliminary prospectus for its IPO yesterday with the securities commissions of each of the provinces.
The Kanata-based company, which designs and develops semiconductors for data communications, has experienced strong growth since it was founded in 1995. Paquette said the funds from the IPO will help the company maintain its growth track.
"The business is growing quite nicely," he said.
"I think we're motoring ahead with our plan and our strategy. I don't think there will be any other changes in the future."
Newbridge Networks Corp. owns 30% of the Tundra. The remaining 70% is owned by institutional investors, employees and friends.
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