The IPO Buzz: Deep Freeze

The Dow Jones Industrial Average dropped 6.2 percent for the week, bringing its loss for the year to 24.5 percent; the Dow is down 53.2 percent from its October 2007 all-time closing high. The S&P 500 lost 7 percent for the week, pushing its loss for 2009 so far to 24.3 percent; the S&P is down 56.3 percent from its October 2007 all-time closing high. The Nasdaq Composite Index slid 6.1 percent for the week, driving it down 18 percent for the year; the Nasdaq is down 54.8 percent from its October 2007 closing high. What’s more: The Nasdaq has lost 74.4 percent from its March 3, 2000, all-time closing high.
 
Distress Signals
Actually, the IPO Valley wasn’t completely dormant last week. One company withdrew its 14-month old S-1 filing to go public and another filed for Chapter 11.
 
GlassHouse Technologies, a Framingham, Massachusetts-based independent IT infrastructure consulting and services firm, withdrew its plans to go public. On Dec. 18, 2007, GlassHouse had filed for an IPO to raise $100 million.
 
Changing World Technologies, a West Hempstead, New York-based distributor of renewable diesel fuel oil and organic fertilizers, filed for Chapter 11 protection on Wednesday, March 4, 2009, in the U.S. Bankruptcy Court for the Southern District of New York, according to the Associated Press.
 
Consider this: In less than a month, Changing World moved from the IPO calendar to the bankruptcy court -– something that none of Wall Street’s graybeards can recall ever happening. The deal had been scheduled to make its public debut through a Dutch auction bidding system during the week of February 9. It was postponed due to market conditions.
 
Dutch Treats
To date, 22 companies have gone public in the United States using the Dutch auction bidding system, according to  Securities and Exchange Commission filings.
 
The first Dutch auction rolled off the IPO calendar on April 4, 1999. It was RavensWood Winery, a Sonoma, California-based winery. Ravenswood priced 1 million shares at $10.50 each. The IPO began trading at $11.13 per share. On April 10, 2001, Constellation Brands (NYSE: STZ) (quote, news, charts and related companies) acquired Ravenswood for cash in the amount of $29.50 per share — UP 181 percent from its initial offering price.
 
Since then, there have been a couple of notable names that have gone public through a Dutch auction system:
 
Google (Nasdaq: GOOG) (quote, news, chart and related companies) priced 19.6 million shares at $85 each to raise $1.7 billion on Aug. 18, 2004. The stock began trading at $100.01 per share. On Nov. 7, 2007, Google traded at its high of $747.24 and closed on Friday, March 6, 2009, at $308.57 per share — still UP 263 percent from its initial offering price.
 
MorningStar (Nasdaq: MORN) (quote, news, charts and related companies), the Chicago-based independent investment research provider, priced 7.6 million shares at $18.50 each on May 2, 2005. The stock began trading at $18.66 per share. On Dec. 11, 2007, MorningStar traded at its high of $85.50 and closed on Friday, March 6 at $28.79 per share – still UP 55.6 percent from its initial offering price.
 
Back to the Present
Currently there are no Dutch auction IPOs in the pipeline.
 
For Monday, March 9, the forecast for the New York City area is spring-like weather. IPOs are expected to continue hibernation. Who knows what will roll into Wall Street?