By John E. Fitzgibbon, Jr.
This week’s IPO calendar picks up where December’s left off. Investors will be able to select from technology, blank checks, and China when they look at the deals on this week’s new-issues launching pad.
When we last saw the IPO market chugging along in December, technology, blank checks, and Chinese IPOs were in play. About a month later, the formula is the same.
Bankers plan to price seven IPOs during the week of January 22. They expect to raise over $1 billion. For next week, January 29, they plan on pricing another seven IPOs. They expect to raise over another $1 billion.
That’s not a shabby start, especially if you take a look at this time a year ago.
For the week of January 23, 2006, bankers were looking to price six IPOs to raise $578.6 million, according to available reports. And, for the week of January 30, bankers were looking to price one IPO to raise $434.8 million.
Then it should come as no surprise to hear that bankers are expecting a big IPO year for 2007. That’s what the buzz is up and down Wall Street.
Stealth Play
Here’s the lowdown on this week’s IPO traffic:
AeroVironmentis said to be on everybody’s “Most Wanted” list. Based in Monrovia, California, AeroVironment is a manufacturer of technologically advanced small unmanned aircraft systems (UAS), which are sold to the U.S. Department of Defense.
The company designs its small UASs to be man-portable, capable of being launched by one person and operated through a handheld control unit. The unmanned aircraft systems are electrically powered and configured to carry electro-optical or infrared sensors.
They provide real-time situational awareness and intelligence, fly quietly at speeds up to 50 miles per hour, and travel up to 20 miles from their launch location on a modular, replaceable battery pack. These characteristics make them suited for reconnaissance, surveillance, target acquisition, and battle damage assessment operations.
There seems to be a marketplace for them. Consider the following:
For the fiscal year ended April 30, 2006, AeroVironment reported revenue of $139.4 million, income from operations of $15.9 million, and net income of $11.2 million.
For the fiscal year ended April 30, 2001, AeroVironment reported revenues of $45.8 million, income from operations of $2 million, and net income of $541,000.
On April 30, 2006, the company reported a funded backlog of $79.6 million, up from $70.4 million for the same period a year ago. AeroVironment’s unfunded backlog on April 30, 2006, was reported at $475.5 million, up from $262.8 million for the same period a year ago.
The rest of this week’s calendar is loaded with “blank check” companies, also known as Specified Purpose Acquisition Companies, or SPACs. There are three such offerings looking to raise $379 million. One was formed to acquire one or more business operations in China. It is China Healthcare Acquisition, but more on this below.
ChinaInside This Week’s IPO Calendar
This week’s new-issues calendar lists seven deals, including a carryover from last week. Here are the industrial sectors:
Three “blank check” companies (China Healthcare Acquisition, NTR Acquisition, and Renaissance Acquisition)
A full-service real estate company (Meruelo Maddux Properties)
A fertilizer company (Converted Organics)
A medical device company—the carryover (Oculus Innovative Sciences)
An unmanned aircraft manufacturer (AeroVironment)
Bankers expect to raise $1.04 billion.
Company Profiles
—AeroVironment plans to price 6.7 million shares at $14 to $16 each. The company will offer 4.5 million shares and selling shareholders will offer 2.2 million shares.The IPO is to start trading on Wednesday.
For the year ending April 30, AeroVironment reported net income of $11.2 million on revenues of $139.4 million, compared with net income of $14.6 million on revenues of $14.2 million for the same period a year ago.
AeroVironment
Formed in 1971, AeroVironment has about 447 employees.
AeroVironment
Underwriters: Goldman Sachs is the lead manager. Acting as co-managers are Friedman Billings Ramsey, Jefferies Quarterdeck, Raymond James, Stifel Nicolaus, and Thomas Weisel Partners.
lead manager. Acting as co-managers are Friedman Billings Ramsey, Jefferies Quarterdeck, Raymond James, Stifel Nicolaus, and Thomas Weisel Partners.
52-Week Percentage Change:
Dow Jones U.S. Defense Index: up 25.6 percent
U.S.Nasdaq Composite Index: up 6.14 percent
—Converted Organics is a Boston-based development-stage company seeking to use organic food waste as raw material to manufacture all-natural soil amendment products. The company plans to distribute its products in the agribusiness, turf management, and retail markets.
Converted Organics plans to price 2 million units at $5 to $6 each. Each unit consists of one share of common stock, one Class A warrant, and one Class B warrant. The IPO is to start trading on Friday.
Converted Organics has never generated any revenues since commencing operations in May 2003. As of September 30, 2006, Converted Organics reported an accumulated deficit of $5.9 million.
Converted Organics has four employees.
Underwriters: Paulson Investment Co. is the lead manager. Acting as co-managers are Investors Capital and National Securities.
manager. Acting as co-managers are Investors Capital and National Securities.
Selected Principal Shareholder: Weston Solutions
52-Week Percentage Change:
Dow Jones U.S. Specialty Chemicals up 26.2 percent
Nasdaq Composite Index: up 6.14 percent
—Meruelo Maddux Properties is a Los Angeles-based full-service real estate company recently formed to develop, redevelop, and own commercial and residential properties in downtown Los Angeles and other urban markets in California. The company will own, lease with rights to purchase, and have rights to acquire interests in 34 development and redevelopment projects and 19 projects that have been developed.
Meruelo Maddux Properties plans to price 25 million shares at $12 to $14 each. The IPO is to start trading on Tuesday.
Underwriters: Friedman Billings Ramsey and UBS Investment Bank are the joint-lead managers. Acting as co-managers are KeyBanc Capital Markets, RBC Capital Markets, Baylock, Cabrera Capital Markets, and De La Rosa.
lead managers. Acting as co-managers are KeyBanc Capital Markets, RBC Capital Markets, Baylock, Cabrera Capital Markets, and De La Rosa.
52-Week Percentage Change:
Dow Jones U.S. Real Estate Index: up 29.3 percent
U.S.Nasdaq Composite Index: up 6.14 percent
The “blank check” companies:
China Healthcare Acquisition is a Pasadena, California-based “blank check” company recently formed to acquire one or more businesses with operations primarily in China. The company plans to price 8.5 million units consisting of one share of common stock and two warrants at $6 each. The units are expected to trade during the week of January 22. The underwriters are Ferris Baker Watts and Ladenburg Thalmann.
NTR Acquisition is a Danbury, Connecticut-based “blank check” company recently formed to acquire one or more businesses with operations in refining, distribution, and marketing of petroleum products in North America. The company plans to price 25 million units consisting of one share of common stock and one warrant at $10 each. The units are expected to trade during the week of January 22. The underwriters are Citigroup and Ladenburg Thalmann.
Renaissance Acquisition is a Pompano Beach, Florida-based “blank check” company recently formed to acquire one or more businesses. The company does not have any specific business combination under consideration. The company plans to price 13 million units consisting of one share of common stock and one warrant at $6 each. The units are expected to trade during the week of January 22. The underwriters are Ladenburg Thalmann EarlyBird Capital.
The carryover:
—Oculus Innovative Sciences is a Petaluma, California-based pharmaceutical company that has developed products intended to help prevent and treat infections in chronic and acute wounds. The company’s main technology, Microcyn, is a non-toxic, electronically charged, or super-oxidized, water-based solution that is designed to treat a wide range of organisms that cause disease.
Oculus Innovative Sciences plans to price 3.5 million shares at $8 to $10 each to raise $31.5 million. The IPO is to start trading during the week of January 22.
As of September 9, 2006, Oculus Innovative Sciences reported an accumulated deficit of $59.3 million.
Oculus Innovative Sciences
Formed in 1999, Oculus Innovative Sciences has about 76 employees.
Oculus Innovative Sciences
Underwriters: Roth Capital is the lead manager. Acting as co-managers are Maxim Group and Brookstreet Securities.
lead manager. Acting as co-managers are Maxim Group and Brookstreet Securities.
Selected Principal Shareholder: Brookstreet Securities
52-Week Percentage Change:
Dow Jones U.S. Medical Equipment Index: down 0.7 percent
U.S.Nasdaq Composite Index: up 6.14 percent