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Technology Stocks : Blank Check IPOs (SPACS) -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (103)	5/22/2005 11:37:19 AM
From: richardred	Respond to of 3862

TheDeal.com Madison Dearborn pulls Boise IPO Friday May 20, 6:00 am ET By David Carey Boise Cascade Co., a paper products supplier controlled by Chicago buyout firm Madison Dearborn Partners LLC, scotched a planned $288 million initial public offering Thursday, May 19, in the face of investors' frosty reaction to the deal. click here Underwriters had slashed the IPO's expected price range Wednesday by nearly 30%, to $17 to $19 a share, in a last-ditch effort to make the issue palatable. The 16-million share offering was originally scheduled to come to market Monday, priced at $24 to $26 a share. But it wasn't enough. Even then, after underwriters made a stab at lowering the range yet further, the market wouldn't bite, a capital markets source said. "We concluded it was in the best interest of our existing shareholders not to proceed in the current climate," said Boise Cascade chief executive Tom Stephens in a statement, blaming the cancellation on unfavorable market conditions. The Boise blowup is the latest in a string of IPOs of businesses controlled by buyout sponsors that have not gone according to plan. Two came to market last week: a $196 million IPO of satellite operator New Skies Satellites BV, backed by Blackstone Group, and the $544 million IPO of Warner Music Group, majority-owned by a consortium that includes Thomas H. Lee Partners LP and Edgar Bronfman Jr. Unlike Boise Cascade, the Warner Music and New Skies deals were completed, but only after radical pricing cuts. New Skies cut its price 13% and Warner slashed its price by 26%, almost as much as Boise Cascade. By Thursday, New Skies was up 3.6% from its May 10 debut price of $16.50. Warner Music fell sharply after its Tuesday IPO. By Thursday it had rebounded some, but was still down 5% from its $17 offering price May 11. Historically, sponsors did not sell shares when they took portfolio companies public. The money raised went instead to the company to pay down debt. But as the new issues market has opened up over the last year, many private equity firms have sold down their stakes in IPOs or received dividends from the IPO proceeds. The sponsors took big dividends from both Warner Music and New Skies, though a fraction of the proceeds from each IPO went to repay debt. What distinguished Boise Cascade from the others is that Madison Dearborn and its co-investors would have pocketed 100% of the proceeds. "You can only go to the well so many times with these type of deals," remarked Cantor Fitzgerald IPO analyst Sal Morreale. "The Street isn't dumb." By contrast, where sponsors have not siphoned off most of the loot, he said, the stocks have fared better. He cited Citi Trends Inc., a discount apparel business that went public Thursday that's controlled by Hampshire Equity Partners. Citi Trend shares were trading at $15.55 by mid-afternoon Thursday, up 11% from their $14 IPO price. Madison Dearborn went some distance to make the Boise Cascade deal fly. It even was willing to forgo a $75 million dividend that was to have been paid out of IPO proceeds. In the end, none of the sponsors' concessions worked. The planned IPO came just seven months have Madison Dearborn led a $3.9 billion LBO of Boise Cascade. Goldman, Sachs & Co., J.P. Morgan Chase & Co., Lehman Brothers Inc. and Deutsche Bank Securities Inc. were the Boise IPO's underwriters. Dennis M. Myers and Carol Anne Huff of Kirkland & Ellis LLP were issuer's counsel, while William V. Fogg of Cravath, Swaine & Moore LLP was counsel to the underwriters. — Vipal Monga contributed to this report biz.yahoo.com