2009 Snapshot
By early March 2009, the Nasdaq Composite Index had lost 55.6 percent from its previous closing high. On March 9, 2009, the Nasdaq closed at 1,268.64, down from 2,859.12, its previous closing high, set on Oct. 31, 2007. One could see the air coming out of the IPO market’s sails.
The October 2007 IPO calendar generated 33 deals, according to U.S. Securities and Exchange Commission filings. In April 2009, the IPO calendar generated three deals, and that was up from just one IPO in March.
2002/2003 Review
By October 2002, the Nasdaq Composite Index had lost 77.9 percent from its previous closing high. On October 9, 2002, the Nasdaq closed at 1,114.11, down from its record closing high of 5,048.62 on March 10, 2000. The air had come out of the IPO market.
The March 2000 IPO calendar produced 64 deals. Fast forward to January through April 2003, when bankers priced five deals — much like this year’s first four months.
Then things started turning around. The May 2003 IPO calendar produced two deals. But the December 2003 calendar produced no fewer than 24 IPOs. For all of 2003, bankers priced a total of 84 IPOs, and in 2004, they did 248 IPOs.
Of course, the 2003 stock market was on the upswing and that gave life to the IPO calendar. But the spark of life for new issues didn’t happen overnight.
Ellora’s Long and Winding Road
This brings us back to the present. In case anyone missed it, the SEC’s filing window saw a flicker of light last week. Nobody is going to say it was a spark of life. Nevertheless, it was a very unusual deal.
On April 21, Ellora Energy (NASDAQ: LORA proposed), a Boulder, Colorado-based independent oil and gas company, re-filed for an IPO looking to raise $100 million. On the surface, it was a run-of-the-mill filing. On closer inspection, it was anything but that.
In November 2006, Ellora Energy went into the IPO pipeline. Since then, the company has filed more changes to its IPO plans than a Hollywood starlet changing the style or color of her hair.
Consider the following:
- On Nov. 3, 2006, Ellora Energy filed for an IPO to raise $86.3 million. The manager was A.G. Edwards. Note: There was a clause that the company would be offering an undetermined number of shares, as would be selling shareholders.
- On Nov. 9, 2006, Ellora Energy filed another registration to register up to 11.6 million shares, “which may be offered and sold, from time to time, by the selling stockholders.”
- On Nov. 9, 2006 Ellora Energy filed another registration to register up to 776,739 shares, “which may be offered and sold, from time to time, by the selling stockholders.”
- On Dec. 26, 2006, Ellora Energy filed an amendment to offer 5 million shares, but no price range.
- On Jan. 25, 2007, Ellora Energy filed an amendment naming A.G. Edwards and Freidman Billings Ramsey as joint-lead managers.
- On Sept. 26, 2007, Ellora Energy filed an amendment to offer 8,569,000 shares — 8 million shares by the company and 569,000 shares by selling shareholders, but no price range.
- On Nov. 5, 2007, Ellora Energy filed an amendment to offer 8,969,023 shares — 8 million shares by the company and 969,023 shares by selling shareholders; still no price range. However, there was a change in lead managers. Wachovia Securities and Raymond James were named joint-lead managers.
- On Dec. 28, 2007, Ellora Energy filed an amendment to offer 11,373,189 shares — 8 million shares by the company and 3,378,189 shares by selling shareholders; it set a price range of $12 to $14 per share.
Note: Each time an amendment was filed, Ellora Energy also updated the two filings of Nov. 9, 2006, to register up to 11.6 million shares and up to 776,739 shares “which may be offered and sold, from time to time, by the selling stockholders.”
Between the amount of insider stock being offered in the initial public offering plus the two other registrations, you can’t help but think: “It’s good to be an inside shareholder of Ellora Energy.” That is, if the deal ever gets out the door.
Note: By the summer of 2008, the price of oil soared to a recover over $150 per barrel, but still no Ellora Energy pricing.
- On June 20, 2008, Ellora Energy filed an amendment increasing the price range to $17 to $19 per share. And there was another change in lead managers. Merrill Lynch and Raymond James were named joint-lead managers.
- On July 21, 2008, Ellora Energy filed an amendment to offer 10,205,168 shares (5 million shares by the company and 5,205,168 shares by selling shareholders) at $17 to $19 each.
- On April 17, 2009, Ellora Energy filed to withdraw the proposed offering and the two registrations of 11.6 million shares and the 776,000 shares, “which may be offered and sold, from time to time, by the selling stockholders.”
On April 21, 2009, it was back to the drawing board. After two years and nearly six months of trying to go public, Ellora Energy is willing to give it another shot.
Note: There was a clause that the company would be offering an undetermined number of shares as would be selling shareholders, but nothing yet of the other two filings.
Stay tuned.