Eric Rosenfeld, the founder and CEO of Rhapsody Acquisition, has had one previous success with a blank check company. Arpeggio Acquisition Corp., which raised $40.8 million when it went public on June 24, 2004, completed its acquisition of Hill International (stock symbol: [t]HIL[/t]), a construction contractor, on June 28, 2006. On November 29, 2007, HINT raised $67.9 million when it forced its warrant holders to exercise 13,577,601 warrants (out of 13,600,000) at $5.00 each. The common shares, which now trade on the NYSE, closed at $13.13 yesterday. If you assume that $8.13 of value has been created from each of the two warrants (which had a strike price of $5.00), the original units, which were priced at $6.00 and are no longer trading, now have a value of $29.39.
As I said in an earlier post, the Rhapsody-Primoris deal could be a winner.
Rhapsody In Harmony With Builder
Lisa LaMotta, 02.20.08, 9:00 PM ET
Eric Rosenfeld obviously has a musical bent: his New York-based investment firm is called Crescendo Partners and he was chairman of a blank-check company called Arpeggio Acquisition, one of the relatively few such businesses to take investors' money and actually buy something.
On Wednesday, Rosenfeld performed an encore, when his current blank-check enterprise, Rhapsody Acquisition., announced it will acquire Primoris, a specialty contractor and engineering company based in Lake Forest, Calif. The privately held company specializes in building power-generating, water and wastewater plants.
A blank-check company, also known as a special-purpose acquisition company, is a twist on Wall Street's old blind-pool concept, where investors put up their money first and find out what they're buying later - in this case Primoris. The modern incarnation includes a few safeguards that the old one didn't, most notably a time horizon, typically two years, for the vehicle to either find an acquisition or return the money to investors.
Since the idea was revived about five years ago, roughly 150 blank-check companies have come public, many of them led by high-profile executives. About 10 were unable to identify targets and were liquidated, while roughly 45 have completed deals, leaving nearly 100 on the prowl. With credit-market turmoil putting pressure on equity prices, this may be a good time for these companies, which have capital that needs to be invested.
Rhapsody found an operating business that has been operating since 1946 in a sector that is not terribly sensitive to stock-market fluctuations -- growing populations need utilities. Primoris will retain its senior management, including Chairman Brian Pratt, as well as maintaining its base of operations in California. About 75% of Primoris' revenues come from the power and energy sectors. The company had sales of $547.7 million last year, a 24.8% increase over 2006.
Primoris investors will receive 24.1 million shares, or 79.3% of Rhapsody at closing. Primoris holders can earn an additional 5 million shares if specified income targets are met.
Rhapsody went public in October 2007 receiving proceeds of $38.8 million on the sale of 5.2 million shares at $8.00 per share. It showed little reaction to the takeover news on Wednesday, rising 2 cents, or 0.3%, to $7.76.
Rosenfeld founded Arpeggio Acquisition in 2004, and then acquired and assumed the name of Hill International, a construction consultancy, in June 2006. He still serves as a director of the company. Before founding Crescendo in 1998, he worked at investment-manager CIBC Oppenheimer and its predecessor Oppenheimer from 1985. He has run a few companies for short periods, including aircraft repair concern Spar Aerospace, which was sold to L-3 Communications in 2001.
us.rd.yahoo.com*http://www.forbes.com/2008/02/20/rhaps... |
