Falcone’s LightSquared Raises $265 Million for Buildout

July 05, 2011, 9:14 AM EDT By Greg Bensinger

(Adds estimate for network’s cost in second paragraph.)

July 5 (Bloomberg) -- Billionaire Philip Falcone’s LightSquared Inc. wireless venture said it raised $265 million of additional funding from new and existing investors for building out its network and other corporate expenses.

LightSquared has now raised a total of $2.3 billion in the past year, according to a statement from the venture today. The company may need to raise as much as $4 billion to construct its so-called fourth-generation network, Jonathan Chaplin, a Credit Suisse Group AG analyst in New York, said in May.

The venture, based in Reston, Virginia, plans to compete with AT&T Inc. and Verizon Wireless by selling wholesale 4G wireless service. It has pledged to the U.S. Federal Communications Commission to build a network to cover 260 million people by 2016.

LightSquared, backed by Falcone’s Harbinger Capital Partners hedge fund, is working to resolve concerns its network may interfere with global-positioning systems. It has signed a deal with Sprint Nextel Corp. to share network equipment and building costs, including cell sites.

--Editors: Ville Heiskanen, Peter Elstrom

To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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Freescale Raises $783 Million Pricing IPO at Bottom of Range

May 26, 2011, 12:46 PM EDT By Lee Spears, Jason Kelly and Ian King

(Updates with CEO’s comment in third paragraph.)

May 26 (Bloomberg) -- Freescale Semiconductor Holdings rose on its first trading day as investors bet demand for automotive chips will help the company cut the debt burden that led underwriters to reduce its initial share-sale price.

Shares of the Austin, Texas-based company rose 95 cents, or 5.3 percent, to $18.95 at 12:17 p.m. on the New York Stock Exchange, trading under the ticker FSL. Freescale raised $783 million in its initial public offering, 25 percent less than it originally sought.

“We think all investors are ultimately going to do well,” Chief Executive Officer Richard Beyer said in a telephone interview today. The company was forced to cut its offer price because “the external market conditions are sketchy,” he said. “Would we have liked to have gone out a higher price? Yes.”

Freescale filed to sell shares to the public in February, saying it would use the proceeds to help reduce debt, which is about $7.5 billion. The company, the largest supplier of chips to the U.S. automobile industry, borrowed billions as it was taken private by Blackstone Group LP, TPG Capital, Carlyle Group and Permira Advisers LLP in a $17.6 billion transaction in 2006.

Freescale needs annual sales of about $4 billion to break even, Beyer said. The company could suffer a decline in revenue from the current level of about $4.8 billion and still be able to manage debt and invest in its business, he said.

Automotive Demand

Unlike makers of personal computer and mobile phone chips, Freescale is not experiencing a drop in demand for its products, said Beyer. Automotive demand remains strong, he said.

Freescale sold 43.5 million shares at $18 each in the IPO, according to a company statement. The company lowered the range yesterday to $18 to $20 from $22 to $24. The offering price reflects a 50 percent discount to the average of $36 that investors paid for the company, according to a regulatory filing.

“The balance sheet is a large issue,” said Cody Acree, a semiconductor analyst at Williams Financial in Dallas. “There are too many other places to put your money that don’t have this kind of issue.”

Freescale has been one of the worst performers among companies taken private during the buyout boom, with a net loss of $1.05 billion in 2010. Other private equity-backed IPOs this year have benefited their investors.

Financial Crisis

The initial share sale of Kinder Morgan Inc. raised $3.3 billion in February, valuing Carlyle Group’s stake at more than twice what it paid. Blackstone, Carlyle, KKR & Co. and Thomas H. Lee Partners LP similarly used the January IPO of Nielsen Holdings NV, to trim their stakes and reap profits. That offering raised $1.9 billion.

The global financial crisis hit Freescale less than two years after its owners closed their deal. The firms brought in Beyer, the former CEO of rival Intersil Corp., to close factories and design facilities, cut jobs, and get out of less profitable businesses. As markets recovered, Freescale also reduced borrowings by more than $2 billion after negotiating with bondholders.

Deutsche Bank AG, Citigroup Inc., Barclays Plc, Credit Suisse Group AG and JPMorgan Chase & Co. managed the offering.

Spirit Airlines Inc., the U.S. discount carrier that charges for carry-on items, raised $187.2 million in its IPO yesterday, 42 percent less than it originally planned. Spirit fell 50 cents, or 4.2 percent, to $11.50 at 12:16 p.m. on the Nasdaq Stock Market, trading under the ticker SAVE.

Reduced Offerings

Spirit and Freescale were forced to reduce their offerings even after Internet companies LinkedIn Corp. and Yandex NV expanded the sizes of their IPOs this month. LinkedIn shares more than doubled on its first day of trading, and Yandex surged 55 percent in its market debut.

Spirit, based in Miramar, Florida, sold 15.6 million shares at $12 each, it said in a statement. The carrier initially planned to raise as much as $320 million, according to a regulatory filing, before shrinking its offering from 20 million shares and lowering the range to $12 to $13 from a band of $14 to $16.

The carrier, which flies mostly between Florida and the Caribbean, had said it would use the funds for future plane purchases and to pay off debt. It is going public as jet fuel hovers near a three-year high, crimping industry profits and forcing carriers to raise fares. Gulfstream International Group Inc. was the last U.S. passenger airline to hold an IPO, selling shares in 2007. It filed for bankruptcy last year.

Private Equity

Private equity firm Indigo Partners LLC bought a majority stake in Spirit in 2006, and also invests in similar low-fare carriers outside the U.S., including Mexico’s Volaris. Oaktree Capital Management LP is the second-biggest investor.

Citigroup and Morgan Stanley led the Spirit IPO.

In other IPO news, Delphi Automotive Plc, the former parts unit of General Motors Co., registered for an initial public offering of $100 million. That amount is a placeholder to calculate filing fees, and the sale’s final size may vary, Troy, Michigan-based Delphi said yesterday in a regulatory filing.

The IPO may raise more than $1 billion, a person with knowledge of the plans said last week.

Delphi, once the largest U.S. auto-parts maker, exited bankruptcy restructuring in October 2009 with four classes of shares. Lenders including private equity firms Elliott Management Corp. and Silver Point Capital LP bought most of the original Delphi and still hold a controlling interest after Delphi bought back stakes from General Motors and the Pension Benefit Guaranty Corp. in March.

The offering’s proceeds will be used for general purposes, retiring debt and capital spending, Delphi said.

Goldman Sachs Group Inc. and JPMorgan are managing the deal.

--With assistance by Kevin Orland in Chicago. Editors: Lisa Rapaport, Tom Giles

To contact the reporters on this story: Lee Spears in New York at lspears3@bloomberg.net; Jason Kelly in New York at jkelly14@bloomberg.net

To contact the editors responsible for this story: Jennifer Sondag at jsondag@bloomberg.net Tom Giles at tgiles5@bloomberg.net

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LinkedIn Raises $352.8 Million in U.S. Initial Public Offering

May 19, 2011, 1:01 PM EDT By Lee Spears and Ari Levy

(Updates with an analyst’s comment in fourth paragraph.)

May 19 (Bloomberg) -- LinkedIn Corp., the largest professional-networking website, more than doubled in the first day of trading after its initial public offering.

The stock surged as much as $77.70 to $122.70 and traded at $108.70 at 12:25 p.m. on the New York Stock Exchange under the symbol LNKD. LinkedIn sold 7.84 million shares at $45 each, the Mountain View, California company said in a statement yesterday.

At $100 a share, LinkedIn is worth about $9.45 billion, or 25 times 2011 revenue, assuming first-quarter sales are matched over the next three quarters. Facebook, the world’s largest social-networking site, would be valued at about $100 billion using the same multiple. LinkedIn’s performance is reminiscent of some of hottest stocks in the dot-com boom. Yahoo! Inc. rose 154 percent on its first trading day in 1996, a year after Netscape Communications Corp. more than doubled in its debut.

“There’s tremendous investor appetite for shares of social media companies, particularly the premier ones like LinkedIn,” said Lou Kerner, managing director of the private shares group at Wedbush Securities Inc., in New York. “I wouldn’t have been surprised to see it open in the $60 to $65 range, but it’s obviously opened up significantly higher than that.”

Social-Networking Boon

LinkedIn’s gains bode well for other social-networking comanies, including Facebook, that are expected to sell shares. They also brighten prospects for the venture capital industry, which lost money over the past 10 years amid a dearth of IPOs.

Members of LinkedIn use the site to search for jobs, recruit employees and find industry experts. While users can create personal profiles for free, paid subscriptions were introduced in 2005, giving recruiters more access to candidates and providing professionals ways to communicate with one another. The company gets 70 percent of revenue from business subscriptions, a model that’s similar to Salesforce.com.

Qihoo 360 Technology Co., the Beijing-based provider of computer anti-virus products and Web browsers, had the biggest first-day gain among U.S. IPOs this year, surging 134 percent the day after raising $175.6 million in its offering.

In two of more anticipated Internet debuts of recent years, Google Inc. rose 18 percent in its 2004 IPO, and VMWare Inc. surged 76 percent when it started trading in 2007. EBay Inc. surged 163 percent in its 1998 IPO.

‘Rich Valuation’

“The valuation for LinkedIn is rich,” said Michael Moe, chief investment officer of GSV Capital Management in Woodside, California, in a televised interview yesterday with Bloomberg West. “To earn the valuation, it has to continue to grow very, very fast.”

While LinkedIn is often compared with social networks such as Facebook and Twitter Inc., which depend on advertising to consumers, the company said in its prospectus that a “substantial portion” of revenue comes from a business that’s comparable to the software-as-a-service model. That’s where companies deliver software over the Internet, a market expected to climb 16 percent this year to $10.7 billion, according to Gartner Inc., a research firm in Stamford, Connecticut.

SaaS companies, including Salesforce, NetSuite Inc. and SuccessFactors Inc., sell subscriptions over the Internet rather than long-term licenses like traditional business-software companies.

LinkedIn’s hiring solutions business, targeted at recruiters, accounted for about half of LinkedIn’s $93.9 million in first-quarter revenue, with 30 percent coming from ads. LinkedIn’s net income rose 14 percent to $2.08 million in the first quarter as sales more than doubled.

Price Range Raised

The company raised the proposed price range for its initial offering on May 17, to $42 to $45 a share from $32 to $35. The sale raised $352.8 million.

Proceeds from the offering will be used to fund existing operations and expand the business, including possibly buying other companies or technologies, LinkedIn said in a filing with the U.S. Securities and Exchange Commission. Including an overallotment option for underwriters to buy an additional 1.18 million shares, LinkedIn may raise as much as $405.7 million.

Morgan Stanley, Bank of America Corp. and JPMorgan Chase & Co. led the offering.

About 62 percent of the shares in the offering were being sold by LinkedIn, according to the prospectus. Other sellers include a venture capital affiliate of Bain Capital LLC, McGraw- Hill Cos., Goldman Sachs Group Inc. and founder and Chairman Reid Hoffman.

Venture capital backers Sequoia Capital, Greylock Partners and Bessemer Venture Partners aren’t selling shares, according to the filing.

--With assistance from Brian Womack in San Francisco. Editors: Lisa Rapaport, Tom Giles

To contact the reporters on this story: Lee Spears in New York at lspears3@bloomberg.net; Ari Levy in San Francisco at alevy5@bloomberg.net;

To contact the editors responsible for this story: Jennifer Sondag at jsondag@bloomberg.net Tom Giles at tgiles5@bloomberg.net

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