Head NV, the maker of skis for Olympic champions Bode Miller and Lindsey Vonn, canceled a rights offer after shareholders revolted against the plan, which threatened to dilute their equity by as much as 92 percent.
Head won’t sell as many as 200 million new preference shares and will seek alternative sources of funding, the Amsterdam-based company said today. The stock dropped a record 50 percent yesterday in Vienna and has lost more than 60 percent since the offer was announced Feb. 11.
“The offering has not been well received and the number of eligible shareholders who have exercised their entitlement to subscribe for offer shares has been lower than anticipated,” the company said in a statement.
Head, the world’s biggest maker of ski bindings and tennis balls, was trying to raise around 9.5 million euros ($12.9 million) to prop up its business. The company, with 319 million euros in revenue in 2009, has lost money in five of the last eight years. Head will report preliminary 2010 results Feb. 24.
Investors had criticized the offer, which would have given shareholders the right to buy 2.27 preferred shares for every security they owned. Holders who didn’t participate would have been “immediately diluted by approximately 69.3 percent,” the company had said. The dilution of their stock’s value would have risen to 92 percent if preference shares were later swapped into common stock.
“We listened to our shareholders and reacted,” Clare Vincent, a Head spokeswoman, wrote in an e-mail.
Austrian regulators had begun investigating whether Head was manipulating the market, financial market authority co- Chairman Kurt Pribil said in a Feb. 16 interview.
Investors had also complained to regulators that the timeframe for the offer was too short. U.S. investors who bought Head stock before its delisting from the New York Stock Exchange in 2008 were ineligible to participate.