The IPO Buzz: Hot Commodities

It’s no mystery why a fertilizer like potash is in demand. Just look at the headlines about the surge in commodity prices, especially corn futures, thanks to the increasing popularity of ethanol as a gasoline additive or alternative. Yes, if you want a good corn crop, you need to load up on fertilizer.
 
Soaring grain prices have driven the CBOT’s corn futures index to a close on Friday, April 18, of 612.75 — UP 70 percent from 360.50, its mid-August low. And much like the California Gold Rush of 1849, it’s the suppliers of the picks, the pans and the grubstakes who profited big time rather than individual miners. In today’s stock market, the potash stocks have been big winners from the skyrocketing corn prices.
 
As of Friday’s close, the leading potash stocks have been:
  • CF Industries (NYSE: CF) closed at $153.94, UP 90 percent from its recent low of $81 on Jan. 23, and UP 303.1 percent from $38.19 on May 1, 2007.
  • Mosaic (NYSE: MOS) closed at $135.25, UP 66 percent from its recent low $92.81 on Jan. 23, and UP 372.3 percent from $28.85 on May 4, 2007.
  • Potash Corp. of Saskatchewan (NYSE: POT) closed at $204.67, UP 70 percent from its recent low of $120.24 on Jan. 17, and UP 247.7 percent from $58.87 on May 1, 2007.
Some Nice Numbers
And now here comes the Intrepid Potash IPO.
 
As a sign of being a “hot issue,” bankers have already increased the size of the deal by 40 percent. On April 17, the proposed offering was ratcheted up to 30 million shares at $27 to $29 each to raise $840 million, up from 24 million shares at $24 to $26 each to raise $600 million announced on April 4.
 
Based in Denver, Intrepid Potash believes it is the largest producer of muriate of potash in the United States. Since 2004, the company has supplied about 1.5 percent of world potash consumption and about 8.5 percent of U.S. consumption annually.
The company has the numbers that point to rapid, profitable growth.
 
For the year ended Dec. 31, 2007, Intrepid Potash reported sales of $213.5 million, UP 33.3 percent from $152.7 million for the year ended 2006 and UP 1,505 percent from $13.3 million for the year ended 2003.
 
For the year ended Dec. 31, 2007, Intrepid Potash reported income from continuing operations of $29.7 million, UP 23.3 percent from $24.1 million for the year ended 2006 and UP 1,314 percent from $2.1 million for the year ended 2003.
 
Rounding out this week’s IPO traffic are four other deals. Including the Intrepid Potash deal, bankers are looking to raise $2.9 billion. (For details, please see IPO Calendar on IPOScoop.com Web site.)
 
According to the IPO professionals, all eyes will be on the Intrepid Potash deal. It is expected to be priced on Monday evening, April 21, and trade on Tuesday, April 22.