RBC’s Mike Gegen on IPO market
Denver-based Bonanza Creek Energy plans $361 million IPO
Dec. 8, 2011
By Aldo Svaldi
Next week is setting up as the busiest week for initial public offerings in the United States since November 2007, according to Renaissance Capital, a Connecticut firm that tracks offerings.
Among those joining the rush of a dozen companies trying to go public before the holidays is Denver-based oil-and- gas company Bonanza Creek Energy Inc.
“It is a pretty opportune time for these IPOs,” said Michael Gegen, a financial adviser at RBC Wealth Management in the Denver Tech Center.
U.S. stock markets are coming off their best week in three years last week, one that saw energy stocks jumping 10 percent, Gegen said. If it goes through, Bonanza Creek’s IPO will be the third by a Colorado company this year and the second in as many months, according to data tracked by Bloomberg. That may not sound like a lot, but ever since stock values crashed in 2008, Colorado has seen only a handful of stock offerings.
Bloomberg reports there were only two Colorado IPOs a year in 2007, 2008 and 2010 and only one in 2009, not counting offerings for investment funds.
Bonanza’s $361.4 million offering would be the largest in Colorado since Molycorp Inc. raised $412.9 million in July 2010.
It would be the third in 2011. Clovis Oncology, a Boulder pharmaceutical company, went public in a $139.1 million offering Nov. 15. Before that, biofuels company Gevo Inc. raised $123.3 million in February.
Bonanza wants to offer 9.5 million shares of common stock to the public, along with the sale of 4.8 million shares by current stockholders, according to the company’s prospectus.
Assuming shares price at $21 each, the company expects to generate $184 million in proceeds for corporate purposes.
About $149.1 million of that will go to replace a line of credit, while $14.9 million is going toward drilling and development and $20 million to expand a processing facility.
Bonanza focuses on energy exploration and production in southern Arkansas, the Denver-Julesburg and North Park basins in Colorado and the San Joaquin Basin in California.
The target date for its offering is Dec. 15, according to IPO Scoop.com.
