ILXL certainly missed the window. While their last filing disclosed that the company is solidly profitable, my guess is that they will need to raise some additional funding. The SEC has made that a bit easier for companies that have withdrawn their registrations:
redherring.com
he SEC eases the IPO withdrawal blues
By Stephen Lacey
Red Herring
March 19
For the 181 technology companies that were forced to bow out of the IPO process last year, the market's dramatic reversal proved to be a trapdoor. Before March 7, Securities and Exchange Commission (SEC) legal uncertainties sometimes made it difficult for companies that pulled public offerings to return to their venture backers to land the capital necessary to keep their businesses running.
A new SEC regulation provides help. Rule 155, which became effective earlier this month, provides that an issuer can commence a private offering 30 days after withdrawal of the public-offering registration statement without fear that the private offering would be 'integrated' with the registered public offering and thus lose its exemption from registration. The rule also has the effect of potentially expanding the pool of investors that companies can tap for financing.
'A number of issuers were caught in a situation where the window shut, and there was a lot of uncertainty about how to raise money,' says David Redlick, an attorney at Hale & Dorr in Boston. 'Rule 155 removes a lot of the uncertainty about conducting a private offering following a failed public offering and sets forth a sensible set of rules to complete that process.'
Before adoption of Rule 155, companies that sought private financing during the first six months following withdrawal of a registered public offering avoided integration concerns by approaching only 'qualified institutional buyers,' which must have at least $100 million under management, to participate in the private offering.
EASING OFF
Now, the length of time has been reduced to 30 days, and the audience of potential investors expanded to include 'accredited investors,' such as institutions with assets exceeding $5 million, and individuals whose net worth exceeds $1 million. 'Rule 155 is addressing an issue that is very relevant in today's market,' says Matthew Fitzmaurice, chief investment officer at Amerindo Investment Advisors. 'Legitimate issuers who needed to tap the private markets were limited to qualified institutional buyers as opposed to a much broader universe of accredited investors.'
The SEC rule-making also provides for two important features that should help restore deal flow if the market turns around. First, companies that have abandoned a private equity offering need to wait only 30 days before filing an IPO registration statement. And for companies that have previously filed, any fees paid to the SEC for a withdrawn registration could be carried over to a new registration statement filed within five years.
In the bull market of the last few years, nobody would have cared about Rule 155. With just 125 technology companies with deals in registration, it would seem that the new rule arrives too late to be of any real benefit to stranded IPO candidates.
But, because the rule benefits issuers by smoothing their transition from the public market to the private market (and vice versa) in an environment in which IPOs have become scarce -- just seven technology companies have priced deals in the first quarter, down from 98 last year -- the regulation should encourage more companies to file for public offerings without fearing that they will not be able to obtain private financing if the IPO filing must be withdrawn. |
