NEWCOM PLANS TO GO PUBLIC; CAPITAL NEEDED IN HURRY.Byline: David Evans David Evans may mean:
NewCom Inc., a computer accessory distributor, is overdrawn o·ver·draw v. o·ver·drew , o·ver·drawn , o·ver·draw·ing, o·ver·draws v.tr. 1. To draw against (a bank account) in excess of credit. 2. at the bank by $23,507. It owes its parent company $17 million. Customers' unpaid bills exceed its revenue for the past six months. Now it wants to go public. The Westlake Village-based company filed last week to sell as much as $17 million in stock in an initial public offering that would value the company at more than $75 million. The sale is the work of parent company Aura Systems Inc., which bought NewCom's predecessor out of bankruptcy less than three years ago for $1 million of stock. Aura would continue to hold 77 percent of NewCom after the IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. . Aura has been footing the bill for its subsidiary and now wants to pass that role to investors as it faces its own cash crunch. ``It's going to the public to raise money because it's been sucking sucking the application of suction to an object by the mouth. sucking drive instinctive enthusiasm of the neonate to suck on a teat, or any object which even remotely resembles a teat. up a lot of cash,'' said Richard Rappaport, managing director for corporate finance at Joseph Charles & Associates of Beverly Hills Beverly Hills, city (1990 pop. 31,971), Los Angeles co., S Calif., completely surrounded by the city of Los Angeles; inc. 1914. The largely residential city is home to many motion-picture and television personalities. , NewCom's underwriter. ``There's no doubt they need the money.'' Aura and NewCom executives didn't return calls seeking comment. Aura poured $8.3 million in cash into NewCom in the quarter ended May 31. During the quarter, Aura's own cash fell to $3.4 million from $7.1 million. Without a capital infusion Capital infusion Often refers to the cross-subsidization of divisions within a firm. When one division is not doing well, it might benefit from an infusion of new funds from the more successful divisions. , Aura could be out of cash by the end of the summer if it keeps burning through funds at its current rate. Aura, based in El Segundo El Segundo (ĕl sēgŭn`dō), industrial city (1990 pop. 15,223), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1917. Its products include navigation and computer systems, aircraft parts, office machines, telephone apparatus, and , has stumbled in its efforts to transform its military technologies to peacetime products. Its shares lost three quarters of their value in the past three years, trading Monday at 1 23/32. A successful IPO of NewCom would let Aura conserve cash and focus on its own problems. Apart from NewCom, its main business is now making audio speakers. ``They don't have the headache of funding NewCom any more,'' Rappaport said. In a preliminary prospectus Preliminary Prospectus A first draft registration statement filed by a firm prior to proceeding with an initial public offering of securities. The document, filed with the Securities & Exchange Commission, is intended to provide pertinent information to prospective shareholders filed with the Securities and Exchange Commission last week, NewCom said it would use proceeds from the stock sale to acquire new products and repay debts. Aura will let NewCom convert $4 million of its $17 million loan into shares of NewCom. The remaining $13 million loan from Aura becomes due and payable in September 1998. NewCom sells fax modems fax modem n. A modem that sends and receives fax transmissions. and multimedia products. It just introduced a product called WebPal that allows consumers to surf the Internet using a television. NewCom is committed to buying an unspecified number of the devices for $16.5 million from its supplier, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the prospectus. As of May 31, NewCom was out of cash and its bank debt was $3.1 million. NewCom is seeking to sell 1.7 million units for between $8 and $10, with each unit containing one share and one five-year warrant to purchase a share at 150 percent of the offering price. The IPO shares represent about 17 percent ownership of NewCom. The IPO values NewCom at between $77 million and $97 million. If the IPO succeeds, Aura's 7.5 million NewCom shares would be worth as much as $75 million, about half of Aura's current market value. CAPTION(S): Photo, Chart Photo: (color) Westlake Village-based NewCom filed last week to sell as much as $17 million in stock in an initial public offering. Bob Halvorsen/Daily News Chart: (color) NEWCOM'S PARENT |
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