Votan brings smaller deal to table in IPO do-over ...
Votan Corp., a subsidiary of MOSCOM Corp. and a maker of voice verification technology, has
hired a new lead underwriter and is once again pursuing an initial public offering. This time, the deal
will be significantly smaller. The company postponed plans for a public offering in October because
the company did not think it was going to get a fair market value. At the time, Moscom Vice
President Rob Boxer said he was disappointed that lead underwriter Ladenburg Thalmann and the
other brokers in the deal "couldn't generate enough interest" in the offering. Votan is now pinning its
IPO hopes on H.J. Meyers, which Votan has hired as its new lead underwriter. The revised deal
will be less than a third the size of the original offering, however. Total net proceeds to Votan from
the 1.6 million share offering are expected to be $6.4 million vs. the $19.5 million the company was
expecting last fall.
"The original deal was absurd for a company that had no revenues," said Ted Levy, an analyst at
Essex Capital Markets who follows MOSCOM. "It looks like reason finally prevailed."
When the company postponed the original offering, the company was in a critical test of its
technology with Chase Manhattan Bank. Chase customers enrolled in that program were able to
conduct transactions after first speaking a predetermined pass phrase into a telephone handset. The
company, which has accumulated net losses of $5.4 million and expects to post losses until at least
late 1998, says in its prospectus that it is still analyzing the results from that test. Levy said he has
heard the technology significantly cut down on fraud and saved tellers and customers a lot of time.
"From what I've heard, the payback to (Chase) was very rapid," Levy said, adding that the delay in
test results could be due to Chase's recent decision to automate more than 500 of its retail branches
with computer equipment from NCR.
MOSCOM will own approximately 50 percent of Votan after the offering. Levy said MOSCOM
was spending nearly a quarter of its total annual expenses, or about $3 million, to support Votan.
"Votan was a terrible drag on MOSCOM," Levy said. In the original prospectus, MOSCOM
planned to own 62 percent of Votan.
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