Cerberus’s Tower Automotive Plans IPO to Repay Debt

Tower Automotive LLC, the automobile parts supplier owned by Cerberus Capital Management LP, plans to raise $106 million in an initial public offering to repay debt.

A total of 6.25 million shares will be offered at $15 to $17 each, Livonia, Michigan-based Tower Automotive said today in a filing with the U.S. Securities and Exchange Commission. The underwriters, led by Goldman Sachs Group Inc., Citigroup Inc. and JPMorgan Chase & Co., have an option to buy an additional 937,500 shares at the same price range, which would increase the proceeds from the IPO to $122 million.

Tower Automotive, once the world’s largest maker of car and truck frames, sought protection from creditors in 2005 after auto sales fell and steel prices increased. New York-based buyout firm Cerberus, which acquired the company for $1 billion when it exited bankruptcy in July 2007, is selling a stake after nine of the 10 U.S. initial offerings in September posted gains and auto sales rose at the fastest pace in more than a year.

Prior to the IPO, the auto-parts supplier plans to change its name to Tower International Inc., according to its filing. The shares will trade on the New York Stock Exchange under the symbol TOWR after the offering.


General Motors Co., 61 percent owned by the U.S. government, will seek to raise $8 billion to $10 billion next month, a smaller initial offering than the Detroit-based automaker originally targeted, two people familiar with the matter said in September.

Tower Automotive plans to use the IPO proceeds to pay a portion of its debt, which totaled $654 million at the end of June, according to the filing.

Revenue at the maker of frames and other chassis parts fell 25 percent to $1.63 billion last year, the filing showed. Tower Automotive’s sales have risen 41 percent to $980.8 million in the first six months of 2010. The company hasn’t reported an annual profit since Cerberus took it over.

Cash for Clunkers

Tower Automotive may be benefiting from U.S. auto sales in September that accelerated to the fastest pace since the federal government’s “cash for clunkers” incentive program last year as deliveries by the top 14 automakers all rose.

Sales last month rose to a seasonally adjusted annual rate of 11.8 million, compared with 9.4 million a year earlier, according to researcher Autodata Corp., based in Woodcliff Lake, New Jersey. In August 2009, the pace was 14.2 million, aided by the federal subsidy for fuel-efficient models.

The month’s stronger sales, bolstered by Dearborn, Michigan-based Ford Motor Co.’s 41 percent gain, are a sign that the car market and the broader economy may have bottomed out and that a slow, stable recovery is under way, said Jesse Toprak, vice president of industry trends for Santa Monica, California-based TrueCar.com.

U.S. IPOs Rebound

While IPOs in the U.S. have also rebounded in the past month, private equity-backed offerings this year have fallen 1.3 percent in the first month of trading in 2010 after averaging gains every year since at least 2001, data compiled by Bloomberg and Greenwich, Connecticut-based Renaissance Capital LLC show.

Apollo Global Management LLC and Warburg Pincus LLC in New York, and Washington-based Carlyle Group have all sold stakes in companies this year that left IPO buyers with losses, according to data compiled by Bloomberg.

Separately, NetSpend Holdings Inc. plans to raise $222 million by selling 18.53 million shares in an IPO this month, according to its SEC filing today and Bloomberg data.

The Austin, Texas-based provider of reloadable prepaid debit cards is offering the shares at $10 to $12 each, the filing showed. NetSpend will trade on the Nasdaq Stock Market under the ticker NTSP.

A total of six companies have planned initial offerings in the U.S. this week after nine of last month’s 10 U.S. IPOs posted advances. Campus Crest Communities Inc., the student housing developer based in Charlotte, North Carolina, plans to raise $411 million in what would be the biggest initial offering of the period after delaying its sale last week.

U.S. Federal Properties Trust Inc., the real estate company that manages properties leased to the U.S. government, delayed a $289 million initial sale that was scheduled for today.

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