Freescale May Be Ready to Go Public Again in 2011

Freescale May Be Ready to Go Public Again by 2011, CEO Says
The Freescale Semiconductor Inc. headquarters in Austin, Texas. Photographer: Jack Plunkett/Bloomberg

Freescale Semiconductor Inc., taken private in a $17.6 billion buyout in 2006, may be ready for an initial public offering in the coming year, Chief Executive Officer Rich Beyer said.

The Austin, Texas-based chipmaker has reorganized its debts and improved its performance, building “credibility in the marketplace,” Beyer said. If the economy continues to recover and the semiconductor industry grows next year, the company will be in a position to sell shares, he said.

“We believe that we will be in a position to do an IPO,” he said yesterday in an interview in San Francisco. “We have a capital structure that works.”

Freescale, the largest supplier of chips to U.S. automakers, will aim to raise more than $1 billion to pay down $1.2 billion of debt coming due in 2014, Beyer said. The company piled on debt when it was taken private by Blackstone Group LP, Carlyle Group, Permira Advisers LLP and TPG Capital. Those investors won’t sell their own shares yet and will allow the company to raise cash with new equity in the IPO, Beyer said.

The company’s net loss narrowed to $156 million last quarter, while sales jumped 29 percent to $1.15 billion. It ended the quarter with $1.07 billion of cash and paid out $144 million in interest.

Freescale has a loan of about $560 million coming due in 2012, then $1.2 billion more in 2014. In 2016, Freescale must repay about $3 billion.

Before 2016, “there will be many opportunities to pay it down, to do converts that eliminate some of it,” Beyer said. “I believe the capital structure is not scary to the financial community.”

Separately, Freescale, which also supplies the main chips in Inc.’s Kindle and Sony Corp.’s Reader electronic readers, said the market for those devices hasn’t been hurt by Apple Inc.’s iPad. Improvements in the reading experience on dedicated readers will continue to outpace that offered by more general tablets computers, Beyer said.

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