First the funding. Then the turnaround. Now the exit.
Santa Ana-based logistics company GeoLogistics Corp. filed plans to go public last week, looking to raise $175 million.
The company, which provides shipping services, didn’t give a tiymetable for the offering. The stock sale could be one of the larger initial offerings for Orange County this year.
Last year, San Clemente-based Sunstone Hotel Investors LLC in San Clemente raised $413 million in the largest OC stock debut of 2004.
At least one other company, Newport Beach-based Jazz Semiconductor Inc., has filed plans to go public. Jazz, which makes chips under contract from other companies, was expected to go out in 2004. Its plans likely were scuttled by woes at its biggest customers.
Investment bankers and others still are watching Jazz, which could raise as much as $150 million.
GeoLogistics’ filing comes four years after turnaround investor Questor Management Co. of Detroit bought a $67.5 million stake and set off on a course to right the struggling business.
The company handles freight-forwarding, customs brokerage, warehousing, supply-chain management and other shipping services for retailers and manufacturers. GeoLogistics doesn’t own any ships or planes itself but contracts for transportations services for customers.
Much of the proceeds from the offering are set to go toward redeeming shares of preferred stock holders and paying down debt.
GeoLogistics didn’t provide a breakdown of its ownership but Questor tops a list of shareholders in the company.
When Questor invested in GeoLogistics in 2001, the company was in the process of paying down debt, improving operations and expanding its business.
Questor helped GeoLogistics rework a credit line with two prior investors, Oaktree Capital Management LLC of Los Angeles and William E. Simon & Sons of Morristown, N.J.
The two early investors bought into GeoLogistics as a way to acquire and consolidate logistics companies.
With the arrival of Questor, GeoLogistics started on a “100-day” plan to reverse operational losses at the company, which was suffering along with some of its retail and technology customers.
GeoLogistics’ woes stemmed from its strategy of acquisitions. In 1996, it bought moving company Bekins for $50 million. It was the first of many buys that proved hard to integrate.
Instead of gaining efficiency through size, GeoLogistics’ costs soared.
In 1999, GeoLogistics sold Caribbean Air Services for $115 million, after buying the company a year earlier for $30 million. The proceeds went to pay down debt.
The move helped but didn’t get GeoLogistics out of the woods. The company came close to bankruptcy in 1999.
Oaktree and William E. Simon & Sons set up an out-of-court restructuring that swapped $110 million in company junk bonds for preferred and common stock.
The two investment firms put in another $24 million into the company, according to a report in financial publication The Daily Deal.
Executives at Questor said they saw a chance to turnaround a company with debt and operational problems. The investment firm had a big hand in recruiting transportation industry veteran William J. Flynn as GeoLogistics’ chief executive in 2002.
Before joining GeoLogistics, Flynn worked for CSX Transportation Inc., which along with Buena Park-based Con-Way Transportation, is part of Florida’s CSX Corp.
GeoLogistics counts yearly revenue of about $1.3 billion and is the seventh largest privately held company here, according to the Business Journal’s list of private companies.
The company has cut its losses during the past few years but still was in the red through September last year.
For the nine-month period, GeoLogistics had sales of $1.1 billion, up 11% from a year earlier. The company’s net loss was $6.4 million, down from $24 million a year earlier.
But GeoLogistics posted its first operating profit in years for the nine-month period, recording a $5.2 million gain versus an operating loss of $14.3 million a year earlier.
