Motricity, which is expected to go public tomorrow, has shrunk the size of its offering once again. The company now says in an SEC filing it expects to sell 5.87 million shares at between $10 and $11 a share, meaning it will likely raise between $58.7 million and $64 million. That’s down from the up to $250 million the company said it hoped to raise when it filed to go public in January. It’s also down from the between $95.5 million and $108 million it said it expected to raise earlier this month by selling 6.75 million shares at between $14 and $16.
As we’ve noted before this is very much a trend likely driven by the up and down markets; all four companies in our realm that have priced their IPOs this year have cut the size of their offerings. We’ll be watching to see how the stock performs during its debut.
Motricity – Why bother with the IPO at this point? You started hoping to raise $250M and now (after broker fees) you’ll maybe get $40M. That won’t cover Wuerch’s expense report for the next CTIA. The game is over and even Wall Street understands that your business model is dated. You should have cashed in 5 years ago when you had the chance.
Oh wait, Wuerch gets a huge payout if there’s an IPO before July 25, so its not about being successful it about just “getting it done” so he can cash in (again). http://moconews.net/article/419-the-man-behind-motricitys-250-million-ipo/
hmmmm
Everyone talks about this like it’s a done deal. It’s not. It’s serial failure. We’re all watching this withering on the vine. These are death throes, violent and desperate. Wuerch WANTS to cash in, but in fact this sale of 14% of the equity at a $400m valuation nets him only something under $400k, not even a year’s salary, so it’s desperation. I think Icahn told him he’s gone if it’s not done.
Yeah! They say they want to raise funds for “acquisitions”. Who you gonna acquire for $40,000,000?points to the hypocrisy of it all.
Done deal…
“…The company, which cut and delayed its IPO, sold 5 million shares for $10 each, raising about $50 million. It had planned to sell 5.87 million shares for $10 to $11 each, after cutting the expected value of its IPO by 39.1 percent….”
http://www.reuters.com/article/idUSN1727068620100617
From today’s WSJ:
“For a company that has raised more than $400 million in venture capital over the past eight years, Motricity Inc.’s initial public offering sure is a small one.
…Motricity won’t have nearly as much cash to spend as it hoped when first filed to go public…
Motricity’s stock is already trading down…”
What an ugly deal. First, one of the underwriters dropped out as AEI ( a MOTR investor and the bucket shop that has raised money for MOTR before) tried to front run the IPO by buying shares below the IPO price just ahead of the deal, which is illegal. When that didn’t work AEI insisted on being added as an underwriter so they could collect a $2.5m fee. Then Ichan had to commit to buying 1m shares at the IPO to get it done. At $10, this is valued at approx. $400m; or around invested capital. Not a great return. This is all about Ryan trying to get some liquidity. Put his on watch list to short around the time the lockout expires….
Can you say freefall? At today’s rate of decline (when the rest of the market is up, by the way), it’ll be delisted before any insiders can sell! How long until they start writing puts on it?
BTW, Icahn bought at IPO minus fee, so he only paid something like $9 while expecting everyone else to pay $10. So what’s he got in this mess now? $110 million? And locked up until after it’s delisted? Must be hoping for Motorola to buy it…
Which underwriter dropped out?
Advanced Equities dropped out according to post above … FWIU it was due to their purchasing a block of shares on private market before the IPO (a few months ago). Problem is they had/have board seats so knew of upcoming ipo. SEC says no sell shares for a long time due to insider knowledge.
Anyone check out their FB page?
Advanced Equities was added in order to get a fee. Barclay’s dropped out…..
YIES! Down to barely over $9 now… Can you say “Circling the drain” ?