Print | Share | Reprint

No big liftoff for Erickson Air-Crane's IPO

by David Holley | Published April 11, 2012 at 4:34 PM

After some delay and eleventh-hour changes, Erickson Air-Crane Inc., a private equity-backed maker of heavy-lift helicopters, finally launched its initial public offering, which traded rather flat in its market debut Wednesday, April 11, after pricing at the low end of its range at $8 a share.

The Portland, Ore., company sold 4.8 million shares to raise $38.4 million, keeping $32 million after expenses. Net proceeds will be used to pay down a portion of its more than $130 million in outstanding debt.

The stock, trading on the Nasdaq under the symbol EAC, opened at $8.05 and gained another 20 cents before flattening out to the IPO, where it traded for most of Wednesday.

Erickson's IPO, initially scheduled for April 5, didn't price until Tuesday, after lowering its target range to between $8 and $9 apiece, from an initial range of $13 to $15 per share. The company also reduced the offering size by 600,000 shares.

Private equity owners ZM Equity Partners, which held 100% of the company before the offering, originally planned to sell almost 800,000 shares to underwriters, based on a full exercise of the greenshoe option. ZM Equity canceled those plans, which would have diluted its stake to 46.5% after the IPO; instead, the company said, it would offer 720,000 shares for the greenshoe option.

On Monday, ZM Equity said it may buy between 750,000 and 1.25 million shares in the offering. With 1.25 million more shares during the offering, ZM would hold 63% of the common stock post-IPO.

ZM, run by former D.B. Zwirn & Co. LP executives Quinn Morgan and Kenneth Lau, did not return a request for comment. It remains unclear whether ZM bought any shares in the offering.

With an additional 1.25 million shares, its stake in Erickson would be worth $48.4 million. Its equity, counting the additional 1.25 million shares, would be about $103.1 million. ZM, an affiliate of Morgan and Lau's New York-based firm Centre Lane Partners LLC, first invested in 2007.

The IPO conferred the business a market capitalization of $76.8 million and an enterprise value of $150.3 million.

That Erickson plans to use the proceeds to pay down some of its $130.1 million in debt, which is 4.6 times its 2011 Ebitda of $28.3 million, could help the stock's post-IPO performance.

Erickson's IPO was underwritten by Stifel Nicolaus Weisel, Oppenheimer & Co. and Lazard Capital Markets, with co-managers D.A. Davidson & Co. and Wedbush Securities Inc.

Milbank, Tweed, Hadley & McCloy LLP's Douglas Tanner is advising the company on the IPO. The underwriters are represented by DLA Piper LLP's Frank M. Conner III and Michael Reed.

Several private equity-backed companies have priced IPOs since the beginning of 2012. The most successful offerings have been by companies using proceeds to pay down debt.

Annie's Inc., an organic foods provider backed by Solera Capital LLC and Najeti Ventures LLC, has by far been the most successful of these. After pricing at $19 -- above its range -- Annie's stock almost immediately doubled. It was trading Wednesday at $38.05.

Annie's sold only 950,000 shares in the IPO, while investors sold 4.05 million shares. The company said net proceeds of about $11.6 million to the company would help pay down a portion of its $13.2 million in outstanding debt.

Vantiv Inc. priced in the middle of its range in March at $17 a share to raise just under $500 million, which it planned to use to pay down debt. Its stock traded up at more than $19 per share on the first day, and was trading Wednesday at $19.75 per share.

Rexnord Corp., which was also trying to bring its leverage down by paying off debt, immediately spiked after pricing at $18 per share, the low end of its range, a week after Vantiv. It was trading Wednesday at $21.89.

Share:

Private Equity

No big liftoff for Erickson Air-Crane's IPO

Free preview

Meet the journalists

David Holley

Reporter, private equity

Movers & Shakers

Video

A fast start toward an uncertain finish

Sectors