BWIP Holding, Cherokee IPOs reverse earlier leveraged buyouts.BWIP BWIP - Basalt Waste Isolation Project Holding, Cherokee IPOs reverse earlier leveraged buyouts Buyout The purchase of a company or a controlling interest of a corporation's shares.Notes: A leveraged buyout Leveraged buyout (LBO) A transaction used to take a public corporation private that is financed through debt such as bank loans and bonds. Because of the large amount of debt relative to equity in the new corporation, the bonds are typically rated below investment-grade, properly referred to as high-yield bonds or junk bonds. Investors can participate in an LBO through either the purchase of the debt (i.e. is accomplished with borrowed money or by issuing more stock. See also: Management Buyout (MBO), Takeover, Target Firm Two local companies have recently completed initial public offerings of stock, "reversing" leveraged buyouts. But Standard & Poor's said last week that both offerings were not for short-term investors. The Long Beach-based BWIP Holding Inc., a $378.6-million-in-sales pump manufacturer, sold 8 million shares at $14.50 a pop on June 5, and is now listed on the over-the-counter market Over-The-Counter Market A decentralized market of securities not listed on a exchange where market participants trade over the telephone, facsimile or electronic network instead of a physical trading floor. There is no central exchange or meeting place for this market. Also referred to as the "OTC market". under the symbol "BWIP." In May 1987, BWIP was purchased from manufacturer Borg-Warner by BWIP management in a leveraged buyout. Sunland-based Cherokee Inc., the garment manufacturer, also went public on June 5, at $6.50 a share, for 2.5 million shares, and is now traded in the over-the-counter market under the symbol "CHKE." Cherokee, formerly a public company, went private in a management-led leveraged buyout in October 1988. S&P, the New York-based investment firm, said of the new BWIP stock, "The lack of strong projected sales and earnings growth prospects does not make for a strong sales pitch when marketing this deal." BWIP sells equipment into the petroleum, chemical and military sectors, and the latter two industries are a bit in the doldrums doldrums (dŏl`drəmz) or equatorial belt of calms, area around the earth centered slightly north of the equator between the two belts of trade winds. The large amount of solar radiation that arrives at the earth in this area causes intense heating of the land and ocean., noted S&P. Too, within 180 days, company insiders can sell 16.3 million shares, bought at $1 each. That could depress the market for some time, said S&P. Nevertheless, BWIP posts good return-on-equity numbers and is recommended for long-term investors, said S&P. On Cherokee, S&P said fiscal 1991 sales should increase 15 percent from 1990 -- excellent in a recession year -- due to the growing importance of private-label production by Cherokee, particularly for the Wal-Mart department store chain. The $208.6 million-in-sales Cherokee remains a leveraged company Leveraged company A company that has debt in its capital structure., and $46 million in corporate IOUs IOU - I Owe YouIOU - I Owe Unto IOU - I Own You IOU - Input/Output Unit IOU - Insert or Update (database) IOU - Interdependent Occupational Unit (currency of Lovely, UK humorous country) IOU - Investor Owned Utilities IOU - Is Owed Unto IOU - Islamic Online University become due in fiscal 1993, noted S&P. "A secondary offering or refinancing appears likely," S&P said. As with BWIP, S&P recommended short-term investors steer clear of Cherokee. "Given the recent poor reception of apparel IPOs, short-term traders should avoid Cherokee." |
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