Cross Match to raise $100m+

Saturday, December 1, 2007

PALM BEACH GARDENS, Fla.--Cross Match Technologies, a biometrics manufacturer with fingerprint, iris and facial offerings, announced at the end of October the intention to go forward with an initial public offering, and in early November issued an amendment to its S-1 registration with the SEC. The IPO was first announced in April of this year, but the offering was postponed in August due to "volatile market conditions." Now it will proceed with the offering of 8,333,334 shares (amended to eliminate 1.25 million secondary shares, now to be granted to underwriters should they want to purchase them to cover over-allotments). After the sale, shares will be listed on the NASDAQ exchange under CROS.
"The markets have improved," said Cross Match vice president of corporate communications and investor relations Pam Rembaum. "We were prepared in August, and now conditions have improved to go back out again."
Originally, more shares were going to be offered from shareholders, and the price estimate was broadened, from between $14 and $16 a share, to between $13 and $17 a share, and then reduced in November, to between $11 and $13. If all shares sell for the new mid-point of the estimate, $12, Cross Match stands to raise a hair more than $100 million.
Rembaum said proceeds from the offering would be used to fund acquisitions, provide working capital and repay approximately $4 million in debt. "We do have about $21 million in cash," Rembaum said, "so that's always a good sign, but in order to go forward and grow we need that additional capital for internal organic growth and R&D." W.R. Hambrecht will act as the sole book-running manager for the offering. Stanford Group Company and E*Trade will acts as co-managers.
The company, perhaps best known for its fingerprint-capture devices, which are used by US Visit, the FBI, and recently received SAFETY Act certification, introduced iris-recognition capabilities to the market in September, and bought German facial recognition developer C-VIS GmbH in June of last year.
According to unaudited financial data provided by Cross Match in its IPO prospectus, the company had revenues of $47 million in the first half of 2007, up from $36 million in the same period of 2006. Its adjusted EBITDA is up to $5 million in 1H 2007, from $.6 million in 1H 2006. However, the company still suffered a net loss of $.3 million for 1H 2007.
Cross Match expects, due to International Biometric Group numbers, the biometrics market to grow 21 percent over the next four years, to $7.4 billion in 2012.
As Security Systems News went to press in early November, Cross Match awaited SEC approval of the IPO, which it hoped would come shortly. The company expected the public offering of shares to go forward in the middle of November.