IFR Magazine – January 20, 2018

The rights issue is fully underwritten
by Barclays, HSBC and Investec, but with
largest shareholder Global City Holdings
agreeing to take up its full pro rata
entitlement to maintain its current 28%
shareholding. That will involve, among
OTHERûlNANCINGûARRANGEMENTSûAûMARGINû
loan and a co-investment with a sovereign
wealth fund.
The base fee is 1.8%, with an incentive
fee of 0.15%, split 40% to Barclays, 40% to
HSBC and 20% to Investec.
Cineworld shares opened on Wednesday
morning at 550p, down around 2.4%.

AMERICAS

CANADA

SHERRITT RAISES US$115m TO CUT DEBT

SHERRITT INTERNATIONAL, a TSX-listed nickel
and cobalt miner, raised C$115m (US$92m)
from an upsized stock sale.
)NûITSûlRSTûEQUITYûOFFERINGûINûAûDECADEû
Sherritt was able to increase the size of the
deal from US$100m at launch.
Sherritt priced 82.14m units at C$1.40 a
share, a 3.5% discount to last sale.
Each unit consisted of one common
share and one-half of a “cobalt-linked”
warrant exercisable at C$1.95 a share.
The ratio at which the warrants convert
into shares is set by the cobalt price, giving
investors leverage to upward movements
in the commodity’s value.
The net proceeds of the offering are
being used for debt reduction.
The company raised the funds by way of
an agency agreement with Paradigm
Capital, Eight Capital and National Bank
Financial, who acted as co-lead agents and
joint bookrunners on behalf of a syndicate
that also included TD Securities.

UNITED STATES

US IPO ACTIVITY HEATS UP

The US IPO market is staging one of the

busiest Januaries on record, but suffered a

setback on Friday with the dismal debut of

the largest deal so far this year - the

US$1.47bn IPO of Apollo-backed home

security provider ADT.

ADT raised as much as 30% less than

hoped and opened down 9.6%.

Investors took issue with the company’s

earnings and business model, but it was still

a setback for sponsor-backed IPOs in the

pipeline.

Apollo will make another foray into the

IPO market in the coming week when it

looks to price the US$184.5m IPO of

electronic gaming machine maker PLAYAGS,

while Blackstone is bringing the US$750m

IPO of auto parts maker GATES INDUSTRIAL.

)NûALLû*ANUARYûISûLIKELYûTOûlNISHûWITHûASû

many as 15 IPO pricings raising more than

US$7bn, the busiest start to the year in

recent memory based on the latter measure.

Though ADT disappointed, NINE ENERGY

SERVICES and AMERICOLD REALTY, the past

week’s two other IPOs, achieved top-end

pricing and traded up on debut.

The coming week will be the busiest of

the year to date, bringing eight IPOs led by

the US$1.9bn NYSE IPO of Brazilian

payments company PAGSEGURO DIGITAL. There

AREûALSOûlVEûBIOTECHû)0/SûSCHEDULEDûTOûPRICEû

in what is seasonally a busy period for the

sector.

More launches could be forthcoming,

PARTICULARLYûFROMûTHEûOILlELDûSERVICESûSECTORû

BUTûWITHûTHEûABSENCEûOFûANYûHIGH

PROlLEû

tech companies, the pipeline is relatively

bereft of excitement.

On the follow-on front, the past week was

dominated by several large, upsized primary

raisings by biotechs, the largest being

BEIGENE’s US$750m offering and AGIOS

PHARMACEUTICALS’ US$475m raising.

Earnings could continue to keep a lid on

follow-on issuance outside the busy biotech

sector.

The past week saw several companies

DISCLOSEûTHATûTHEYûHADûlLEDûCONlDENTIALLYû

Sponsor-backed software company CERIDIAN

HCMûANDû"ROOKlELD

BACKEDûGRAFTECH

INTERNATIONALûBOTHûANNOUNCEDûTHEYûHADûlLEDû

with the SEC for IPOs that could price later

this year.

KEANE GROUP, NINE ENERGY

RIDE OIL CYCLE

For investors looking at KEANE GROUP, a

Cerberus-backed oil fracker that went

public a year ago, the company’s recent

DECISIONûTOûEXPANDûITSûDRILLINGûmEETûPOINTEDû

TOûCONlDENCEûINûTHEûSUSTAINABILITYûOFûTHEû

current drilling cycle.

!ûCENTRALûDILEMMAûFORûOILlELDûSERVICESû

companies and their investment premise

is whether to reinvest or to retain/

DISTRIBUTEûCASHûmOWS

The purchase of three new fracking rigs,

two of which will go into service in the

second quarter and the other in the third

quarter, marked a reversal of comments by

Keane management late last year that rig

ECONOMICSûWEREûINSUFlCIENTûTOûJUSTIFYû

expansion.

Since then, WTI oil has continued its

march to US$63.97, from the mid-50s at

the time of the decision to defer

expansion.

Keane reinforced a more bullish outlook

by facilitating a twice-upsized, all-

secondary sale of 13.3m shares.

4HEûDEALûWASûlRSTûmAGGEDûATûMûSHARESû

before jumping to 11m shares on the

4UESDAY

MORNINGûLAUNCHûANDûlNISHINGûATû

13.3m shares priced on Wednesday

evening at US$18.25, a 1.4% discount to the

US$18.51 last sale.

Citigroup and JP Morgan were the actives

among the six bookrunners on the

offering, which saw Cerberus and other

insiders reduce their combined stake from

64.6% to 52.9%, leaving a still sizable

overhang of 59m shares.

“It is a better oil environment,” said one

banker involved in the underwriting.

“There is a view among some [investors]

that this company is cheap.”

Keane broke offer on Thursday to close

at US$17.96.

Keane expects to generate adjusted

Ebitda of US$90m–$95m on revenue of

US$498m–$500m, versus US$71.6m and

US$477.3m, respectively, in Q3, based on

preliminary estimates.

NINE ENERGY SERVICE, a provider of well

completion services, achieved top-end

pricing on its US$161m IPO on the tail-

winds of similar industry trends.

JP Morgan, Goldman Sachs and Wells Fargo

placed 7m shares at US$23, against a

US$20-$23 range that was intentionally

wide to accommodate the cyclical nature

of the industry.

Nine Energy traded early on Friday at

US$23.99 on its NYSE debut.

The participation of energy-focused,

LONG

ONLYûINVESTORSûONûRECENTûOILlELDû

services deals is notable. Roadshow

meetings in Boston on Wednesday and the

West Coast earlier in the week saw strong

attendance from the long-only

community, a banker on the Nine Energy

IPO told IFR.

Like Keane, Nine Energy is pumping out

CASHûmOWSû)NûTHEûlRSTûNINEûMONTHSûOFûTHEû

US EQUITIES
BOOKRUNNERS: 1/1/2018 TO DATE

Managing No of Total Share
bank or group issues US$(m) (%)
1 Morgan Stanley 9 1,521.91 13.6
2 RBC 4 1,339.95 12.0
3 Barclays 6 1,335.74 11.9
4 Goldman Sachs 9 1,258.70 11.3
5 BAML 8 1,162.01 10.4
6 JP Morgan 11 1,155.38 10.3
7 Citigroup 8 1,075.74 9.6
8 Credit Suisse 3 462.10 4.1
9 Wells Fargo 5 396.59 3.5
10 Jefferies 4 306.92 2.7
Total 29 11,188.31
Including all domestic and international deals and rights issues
Source: Thomson Reuters SDC code: C3r