Freescale Said to Plan Filing for Public Offering by Year-End
Freescale Semiconductor
Jack Plunkett/Bloomberg
A sign marks the Freescale Semiconductor Inc. headquarters in Austin, Texas.
A sign marks the Freescale Semiconductor Inc. headquarters in Austin, Texas. Photographer: Jack Plunkett/Bloomberg
Freescale Semiconductor Inc., the chipmaker acquired in a 2006 leveraged buyout, may file to sell shares in an initial public offering by the end of this year, according to two people briefed on the plan.
The chipmaker met with investment banks last week at its headquarters in Austin, Texas, the people said. No underwriters were chosen and a filing isn’t imminent, said the people, who declined to be named because the company is closely held.
Freescale was taken private in a $17.6 billion transaction in 2006 by Blackstone Group LP, Carlyle Group, Permira Advisers LLP and TPG. Blackstone President Tony James said this week during a presentation to the Oregon Investment Council that the company is “about to file to go public.”
Discussions about a possible IPO are “more active today than they were a while back,” Freescale Chief Executive Officer Rich Beyer said in a July 23 interview. The company needs a “healthy” economy and a growing semiconductor market for a share sale to succeed, he said.
Representatives of Freescale and the private-equity firms declined to comment.
Reuters reported July 21 that Freescale had held talks with investment banks about an IPO.
Freescale had an operating loss of $18 million in the second quarter, compared with a loss of $345 million in the same period a year earlier. Cash flow from operations jumped to $120 million from a deficit of $68 million a year earlier.
$7.6 Billion Debt
That’s not enough for the company to be able to make progress in paying down portions of its $7.6 billion of debt before it starts maturing in 2012, according to Jason Pompeii, an analyst at Fitch Ratings in Chicago. A rally in the company’s bonds over the last month, partly fueled by speculation that its owners are considering selling shares to pay off debt, may be optimistic, he said.
“They’ve made tremendous progress and now they are at a point where their cost structure will drive meaningful gains in profitability,” said Pompeii. “But it’s difficult to make the case that this company could organically meet its debt schedule. They will need to refinance a significant amount of debt.”
To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net; Jason Kelly in New York at jkelly14@bloomberg.net;
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