Big payoffs for Madison in Boise IPO
$231 million
from sale; retains tight control
By Bob Tita
May 09, 2005
Madison Dearborn
Partners LLC is wasting no time cashing in on its 2004 acquisition of
paper and wood products maker Boise Cascade Holdings LLC.
The Chicago-based private-equity firm is in line to receive at least
$231 million of the $400 million in cash proceeds from an IPO of Boise
shares, according to a U.S. Securities and Exchange Commission filing.
On top of that, Madison Dearborn's original $245-million investment in
41.4 million Boise shares will be worth $1.03 billion if the stock
fetches an anticipated $25 per share in the May 19 IPO.
Madison Dearborn will retain tight control even after the IPO, with 62%
of Boise Cascade's 67 million shares. The 16 million shares offered to
the public will represent 24% of the total. Itasca-based office products
retailer OfficeMax Inc., Boise's previous owner, will have 14%.
Analysts say Madison Dearborn wants to lock in profits quickly after
last fall's $3.9-billion leveraged buyout and lay the groundwork for
additional share selloffs.
The IPO's immediate benefits for Boise Cascade and those who buy the
shares are less certain. No proceeds will be invested directly in
Boise's core operations. The IPO will help pay down a $251-million loan;
Boise Cascade will still have $1.49 billion in debt and a junk-level
credit rating.
Nevertheless, market observers expect Boise Cascade's name to be warmly
received on Wall Street. In 2004, sales were $5.7 billion with pro forma
net income of $156 million, or $2.34 a share, after three straight years
of losses.
By not unloading more shares, analysts say Madison Dearborn is signaling
its confidence in Boise's future. Boise Cascade and Madison Dearborn
representatives decline to comment on the IPO.
Says Charles Oppenheimer, president of Amvest Financial Group Inc., a
Missouri-based investment bank specializing in printing and paper
companies, "It's a pure bet . . . that paper prices are going to go up."
©2005 by Crain
Communications Inc.
Madison Dearborn pulled
the registration a few weeks later.
