The IPO Buzz: Sink or Swim

Danaos (NYSE: DAC) priced 10.3 million shares at $21 each, the mid-point of its $20- to $22-a-share filing range. It opened at $21 and closed at $20.85, DOWN 0.71 percent from its initial offering price.
The balance of last week’s IPO calendar didn’t fare any better. Four of six planned offerings never made it out the door and have been rescheduled for this week, beginning on Monday, October 9.
The other IPO that was priced from last week’s calendar was BreitBurn Energy (Nasdaq: BBEP), another oil and gas limited partnership. It, too, floundered in the aftermarket.
The Los Angeles-based company’s deal had been sitting on the back burner waiting for a pricing date since Aug. 16. That was when the company filed an amendment setting its pricing terms. It called for 6 million common units to be offered to investors at $19 to $21 each. About seven weeks later, the IPO was priced below range at $18.50 per common unit. It closed its opening day at $18.21, DOWN 1.57 percent from its initial offering price. BreitBurn Energy’s IPO finished the week unchanged at $18.50.
There were a few other companies that made debuts last week that various IPO reporting services dubbed “IPOs” that weren’t exactly IPOs. They were: Rhapsody Acquisition (OTCBB: RPSDU), Tidelands Bancshares (Nasdaq: TDBK), ViewPoint Bank (Nasdaq: VPFG) and Western Union (NYSE: WU).
Rhapsody, a New York City-based “blank check” company with no specific business combination under consideration, priced 4.5 million units at $8 each on Tuesday evening. It closed its opening day at $8.13 and finished the week at $8.01, UP 0.12 percent from its initial offering price.
Setting a precise offering date for a “blank check” IPO has proven to be difficult. Every time a banker thinks the Securities and Exchange Commission is about to sign off on a deal, the regulator has more questions, according to investment bankers underwriting “black check” companies. That causes delays in pricing the deal.
This is why the Rhapsody deal was not on anybody’s IPO calendar last week.
Tideland Bancshares, a South Carolina-based bank holding company, offered 1.2 million shares at $15 each on Tuesday evening for trading on the Nasdaq Global Market. Before the offering, its shares had been traded on the OTC bulletin board. On Tuesday, it closed on the bulletin board at $17.50. On Wednesday, it closed at $15.05 per share.
ViewPoint Bank is a Plano, Texas-based financial services firm that converted to stock ownership from a mutual savings bank through a subscription offering to depositors at $10 per share. The stock closed its opening day at $14.25 per share -– up 42.5 percent from the subscription offering price.
Western Union was formed in 1851 as The New York and Mississippi Valley Printing Telegraph Co. It changed its name to Western Union Telegraph Co. in 1856 and completed the first transcontinental telegraph line in 1861. In 1871, the company introduced its money transfer service, which is now the backbone of its business.
In 1884, the Dow Jones Transportation Average stock market index was created, and Western Union was one of the original 11 companies that made up the index. It traded under the NYSE symbol of WU, the same symbol as today.
In 1994, Western Union was bought by First Financial Management Corp. and merged with First Data Corp. in 1995.
On Oct. 3, 2006, First Data distributed one share of common stock of Western Union for each share of First Data’s common stock to First Data shareholders.
Sweet 16
Now back to the IPO market.
All in all, last week was not a complete bust. There was good news from other parts of the IPO market. It came from the SEC filing window.
Sixteen companies filed amendments posting pricing terms. They are looking to raise $3.3 billion. That was the largest number of filings since the week ending July 22, 2005, when 16 companies also filed amendments posting pricing terms.
When this happens, it’s always a signal that a deal is being moved from the IPO pipeline to the IPO calendar. And that was exactly what happened. Seven of those 16 IPOs found their way onto the new-issues calendar.
For the week of October 9: The $1 billion SAIC (NYSE: SAI proposed), the giant San Diego-based defense contractor’s IPO, is expected to start trading on Friday, Oct. 13.
For the week of October 16: Six names from last week’s filings are now on this week’s IPO calendar.
The message is clear: “The IPO calendar is alive and well. Ladies and gentlemen, start your engines!”