So far this year, no Orange County company has dared the icy waters of the initial public offering market as eight OC companies have withdrawn their planned offerings and seven more have put theirs on hold.
The OC companies are hitting the same wall as many others nationally. According to data complied by IPO.com, 109 companies nationwide have withdrawn their initial public offerings so far this year because of poor market conditions. This compares with 42 companies that withdrew their offerings in the same period last year.
One of the OC companies is Anaheim-based Advanced Thermal Technologies Inc. In February, it postponed its public offering indefinitely. The company designs, manufactures and sells systems that precisely control the temperature of process chambers in equipment used to manufacture semiconductors.
Advanced Thermal had planned to offer 4 million shares to the public at $9 to $11 each. Its target: raise $44 million. The lead underwriter for the issue was New York-based Needham & Co.
“Right now, the market condition is the reason why we are not pursuing the IPO,” said Cameron Adamson, chief financial officer of Advanced Thermal Science. “The semiconductor market is also not doing well.”
Adamson said that the company does not know when or whether it will proceed with its offering.
“I have no idea when the stock market will revive,” he said.
Anaheim-based Alliance Imaging Inc., which is a provider of outsourced diagnostic imaging services, also withdrew its public offering as the stock market deteriorated. Alliance had hoped to raise $172.5 million.
Now the two firms have to establish their businesses and turn profitable. In its fiscal year 2000, Advanced Thermal incurred a loss of $1.7 million on revenue of $6.8 million. Last year, Alliance Imaging had revenue of $345 million and a loss of $2.2 million.
Meanwhile, Huntington Beach-based Flashcom Inc. fell much harder. In May last year, the company filed with the Securities and Exchange Commission for an offering, only to withdraw its filing seven months later and enter bankruptcy.
Flashcom was not planning a small offering. The company hoped to raise $125 million, and the offering was being underwritten by New York-based Salomon Smith Barney Inc. Had the company managed to tap the public market, Flashcom would have been among the five largest OC offerings last year (see list on page 60).
Even spinoffs are having difficulties. Newport Beach-based chip maker Conexant Systems Inc. had to change its plan to spin off its Mindspeed unit. A planned initial public offering was to be lead managed by Credit Suisse First Boston Corp. But now Conexant does not plan to take the unit directly to the public market. Rather, it will give shares of Mindspeed to the existing shareholders of Conexant.
Ribapharm Inc., a planned spinoff from ICN Pharmaceuticals Inc., is in a holding pattern. The biotechnology company, based in Costa Mesa, is planning to raise around $250 million through its public offering, which will be managed by UBS Warburg LLC. ICN will continue to hold 80% after the offering.
ICN filed with the Securities and Exchange Commission last June to spin off Ribapharm, but the offering has yet to materialize. The delay has become one of several sticking points between ICN’s management and a group of dissident shareholders who have nominated their own slate of directors ahead of the company’s annual meeting this week.
The ripple effect of the downward slide in the stock market is being felt by almost every sector. Healthcare companies also had to withdraw or defer their offering plans. Irvine-based Masimo Corp., a company that licenses and markets advanced signal processing technologies and products for the noninvasive monitoring of vital signs, withdrew its offering after deferring it twice in seven months. The company was planning to raise around $65 million with its lead underwriter, Deutsche Banc Alex. Brown Inc.
“This withdrawal request is being made because current market conditions do not support a public offering,” the company said in its filing with the SEC.
Meanwhile, a year after filing to go public, Irvine-based Leadersonline Inc.,a unit of Chicago-based search firm Heidrick & Struggles International Inc.,withdrew its application, again because of poor market conditions. The issue was to be lead managed by Goldman Sachs & Co.
The company “does not believe that the terms available in the public market at this time are sufficiently favorable to warrant proceeding with or completing an initial public offering of the shares,” the company said in its filing with the SEC.
Other big names that withdrew their offering plans were Nexgenix Inc., which pulled the plug on a $57 million offering; and Zland.Com Inc., which was hoping to raise $50 million.
Nine of the firms that withdrew or held up their applications were lead managed by large investment banks. Three of those nine issues were to be lead managed by Credit Suisse First Boston, while two were to be managed by Deutsche Banc Alex. Brown.
The OC companies were hoping for nearly $1 billion in all.
There were six issues that were self-underwritten by the companies or companies that had no underwriter. They were: Dana Point-based Albion Aviation Inc.; Newport Beach-based Cohy China Communications Corp; San Clemente-based Jpal Inc.; Irvine-based Primal Solutions Inc.; Newport Beach-based TMEX USA Inc.; and Tustin-based Ocean West Holding Corp. n
