Cross Match tweaks IPO plans again

Thursday, November 8, 2007

PALM BEACH GARDENS, Fla.--Cross Match Technologies, makers of a number of biometric solutions, announced on Tuesday another amendment to its plans to offer an initial public offering. After postponing its April-announced IPO in August, the company said it was ready to go forward again in October. This week, the company altered its proposed pricing and the number of shares that will be available.

Edit: On Nov. 13, the company announced it was again withrawing its plans for an IPO due to volatile market condititions. It may again decide to offer an IP


At the October go-ahead, Cross Match indicated 8,333,334 primary shares would be available, along with another 1,250,000 secondary shares. This week, the company said the 1.25 million secondary shares would instead be converted to shares available to underwriters, who can purchase them to cover over-allotments, if any. WR Hambrecht & Co. is the sole bookrunner for the offering. Stanford Group Company and E*Trade Securities are the co-managers.
The offering price range has been reduced from between $14 and $16 a share in April, to between $13 and $17 a share in October, to between $11 and $13 this week. Should all primary shares sell for the new mid-point of the estimate, $12, Cross Match stands to raise a hair more than $100 million.
In an interview last month, Cross Match vice president of corporate communications and investor relations Pam 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."
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.