Same company, diluted stock.
A nice way how to skin a cat. Note that the book value of the old company was over $95MM and ICST has been profitable for years.
As of February 3, 1999, there were 12,113,500 outstanding shares... so the book value on the 12M shares was around $8.
sec.gov
In 1999 they bought out *all* (98%) shareholders at $21.25 - and loaded the company with debt so that the equity was a negative $100MM. Proceeds of about $256MM went to the existing shareholders and for vested options.
They called that procedure "recapitalisation" (???)
Now it is different:
Shares Purchased Total Consideration
------------------ ---------------------
Average Price
Number Percent Amount Percent Per Share
---------- ------- ------------- ------- -------------
(in millions)
<S> <C> <C> <C> <C> <C>
Existing shareholders... 51,751,564 80.5% $ 63.3 28.0% $ 0.82
New investors........... 12,500,000 19.5 162.5 72.0 $13.00
---------- ----- ------ -----
Total................. 64,251,564 100.0% $225.8 100.0%
========== ===== ====== =====
sec.gov
Now the company has 64.2MM shares and I don't see what is different with the "new" ICST.
Outside shareholders have less then 20% of the stock and the cash raised in the IPO is immediately used to repay the debt leaving the company with less cash than it had in 1999.
In other words: From 256MM they paid (for 98%), the IPO brings back around 162MM - for 19.5%.
Add the 30MM that some venture capitalist injected, and add some operating earnings ICST had during the year, and you end up with 95MM - 96 MM + 30 + 30 == 59MM equity.
The stockholders equity is now 55MM, down 40MM from the 1999 value.
Looks like it is overvalued by a factor 4 to 6:
-it has been taken out at 2.6x book or 6x operating income
-now it trades at 18x book or around 24x operating income.
etc.
existing stockhodlers paid only $0.82/shr. An interesting way to "repurchase" a company (ie hold 80%) without using significant money.
Thumbs down. |
