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Much of the pulp TV programming that RHI Entertainment Inc. churns out is a lampooner’s dream. "Killer Wave." "Blood Monkey." "Black Swarm." You get the picture.
That didn’t stop investors from handing the New York-based production company $189 million in its initial public stock offering on Wednesday.
But by the end of the stock’s first session of trading, the people who bought in may have been feeling like one of the hapless victims in RHI’s horror fare: "What was I thinking opening that door?"
The deal was priced at $14 a share late Tuesday, well below the $16-to-$18 range RHI hoped to get. But even $14 turned out to be too high: The stock immediately fell as trading began Wednesday, dropped as low as $13 and closed at $13.50. An instant discount is never a good sign for a new offering.
RHI is the production vehicle of the Halmi family -- Robert Halmi Jr., 51, and his father Robert Sr., 84. Their niches are made-for-TV movies and TV miniseries, some of which have been critical successes (the Western "Lonesome Dove" in 1989, for one). RHI’s 2007 science fiction series "Tin Man," a reimagining of "The Wizard of Oz," was the biggest ratings hit in the Sci Fi channel’s history.
A lot of what the Halmis have produced over the last 30 years, however, has just filled content space on the networks and cable. Critics be damned, the Halmis love to put their own stamp on remakes of the classics: "Moby Dick," for instance, and "Gulliver’s Travels."
Nothing wrong with that. Except that RHI, in its current incarnation, is bleeding red ink. It needed the IPO to help pay off crushing debt, not to directly fund a new era of Halmi productions. . . .
Read on »
No Emmy for this deal: TV-miniseries kingpin RHI Entertainment Inc. priced its initial public stock offering late Tuesday at $14 a share, below the $16-to-$18 range the company had hoped to get.
RHI, based in New York, is the production house of the Halmi family -- legendary producer Robert Halmi Sr. and son Robert Jr.
RHI was a public firm in the early 1990s until it was bought out by Hallmark Cards in 1994. The Halmis stayed on board under Hallmark’s wing, producing a slew of content for the Hallmark Channel and for other outlets.
They and other investors then bought the firm back from Hallmark in a leveraged buyout in January 2006, with Robert Jr. running the newly independent business. The buyout set the scene for the stock IPO: The Halmis needed capital to pare back the debt from the LBO.
But debt-reduction IPOs often fail to get investors excited. RHI had to settle for less than it wanted.
The company had hoped to raise as much as $225 million by selling 12.5 million shares at $18. Instead, the underwriters of the deal (led by JPMorgan Securities) had to cut the price to $14, although the number of shares sold was boosted to 13.5 million. Gross proceeds: $189 million.
This is no Oscar mill, but RHI claimed nearly half the market for TV miniseries from 2000 to 2007, including "Arabian Nights," "Dinotopia" and last year’s "Tin Man" on the Sci-Fi channel. Its made-for-TV flicks have included "Moby Dick" and "Killer Wave."
The stock is expected to begin trading on Nasdaq on Wednesday under the ticker symbol RHIE.
A relative rarity was expected on Wall Street this afternoon: an initial public stock offering from a movie producer.
RHI Entertainment Inc., a well-known name in made-for-TV movies and miniseries, was hoping to price an offering of 12.5 million shares between $16 and $18 apiece.
RHI, based in New York, is the vehicle for the Halmi family -- legendary producer Robert Halmi Sr. and son Robert Jr. RHI was a public firm in the early 1990s until it was bought out by Hallmark Cards in 1994. In January 2006 Robert Halmi Jr. and other investors bought the company back from Hallmark. Robert Jr. now heads the business.
RHI, with the Halmis still in charge while under Hallmark's wing, claimed nearly half the market for TV miniseries from 2000 to 2007, including "Arabian Nights," "Dinotopia" and last year’s "Tin Man" on the Sci-Fi channel. Its made-for-TV flicks have included "Moby Dick" and "Killer Wave."
The company’s basic pitch to investors is that it can make movies for relatively low price tags and reap a long-term profit stream from its expanding content library.
But the Halmis’ greatest need at the moment is to cut the debt load incurred in buying the firm back from Hallmark. That’s where most of the money raised in the IPO would go: debt reduction. And that usually doesn’t make for a thrilling pitch to potential stock investors.
JPMorgan Securities and Banc of America Securities are managing the IPO.
From Times staff writer Edward Silver:
A crowd of solar energy stocks came public in the last two years. So far In 2008, the flow of new shares, solar and otherwise, is all but stopped up. One offering made it through Thursday, however. Real Goods Solar Inc. has been installing and distributing panels and other products in California since 1978, so it must be run by a patient bunch.
Real Goods, a subsidiary of New Age supermarket Gaiam Inc., raised $55 million in its IPO. One of the littler operations to hit the market, it generated net revenue of $6.5 million in the March quarter, its prospectus shows, along with a loss in the vicinity of $325,000.
Noting the deficit and perhaps realizing that Real Goods’ business is fairly hard to scale up and easy to enter, investors have bid the shares down. After being priced at $10, they were going for $8.50 at midday Friday.
“Green” is currently the top theme for new issuance, noted Kathleen Smith of Renaissance Capital in Greenwich, Conn. Per the IPO research firm’s accounting, 17 new stocks displayed an ecological tinge last year, out of 273 total. In a sluggish 2008, the proportion is much higher: five of 29. Said Smith: “We think there will be a lot of opportunity for that group this year.”
Money & Co. blogger Tom Petruno is on vacation this week. He returns Monday.
Digital Domain Inc., the Hollywood special-effects studio that had planned its initial public stock offering for this week, looks like it’s having trouble closing the deal -- at least at the price it wants.
The firm’s underwriter, San Francisco investment bank Thomas Weisel Partners, says this morning that pricing of the deal is "day to day." That usually means the underwriter still is trying to drum up enough investor interest to get the offering done.
Digital had hoped to sell 6 million shares at $12 to $14 apiece. But the company has been losing money since 2005, and some investors apparently aren’t sure of the payoff from the firm’s plan to develop its own feature films and to push into video-game development and production. More on the deal here and here.
Digital could cut the price of the deal if it wants to sell itself cheap. Another option would be to go the private-equity route to raise capital.
Posted April 24, 2008
Fertilizer producer Intrepid Potash Inc. lived up to its billing in its stock debut today: The shares, priced at $32 in their initial offering on Monday, rocketed to close at $50.40 on the New York Stock Exchange, for a one-day gain of 58%.
By contrast, the average first-day pop for IPOs in 2008 is 10%, down from 13% last year, according to data tracker ipohome.com. Among other recent deals, credit-card processor Visa Inc. jumped 28% on its first day of trading March 19.
 Potash (potassium) is a critical crop fertilizer that improves the hardiness of plants, including their ability to withstand drought and parasites. With farmers worldwide planting fence row to fence row to meet global food (and ethanol) demand, the relative handful of large-scale potash producers can charge top-dollar for the stuff -- which, in turn, we're all paying for at the grocery store.
Denver-based Intrepid earned $18.6 million last year (adjusted for taxes) on sales of $213 million. That works out to a profit of only about 25 cents a share on the now-75 million shares outstanding. So at today’s lofty closing price the stock clearly is a bet on a continuing global agribusiness boom -- and much fatter per-share results for Intrepid.
Matt Therian, an analyst at ipohome.com in Greenwich, Conn., says Intrepid’s big draw for investors is the proximity of its major mines to Great Plains and Midwest farms. "Where they produce is where they sell their potash," he says. That gives the company an advantage over Canadian competitors.
As Intrepid notes in its stock prospectus, "We are the largest producer of potash in the U.S., the second-largest potash consuming country in the world." For Wall Street, that was 'nuff said.
Next up on the IPO stage: Digital Domain Inc., a Hollywood special-effects studio. The company’s underwriters expect to price the deal on Wednesday. More on that offering here and here.
Photo: Intrepid's potash mine near Moab, Utah.
Posted April 22, 2008
Digital Domain, one of Hollywood’s best-known special-effects studios, expects to price its initial public stock offering on Tuesday or Wednesday.
 But in terms of IPO-market buzz this week, the Venice-based FX firm's work on such films as "Titanic" and "Transformers" can’t compete with the allure of a company at the far, far opposite end of the technology spectrum: Denver-based fertilizer producer Intrepid Potash.
Intrepid’s underwriters priced its 30-million-share offering this afternoon at $32 a piece, well above the expected range of $27 to $29. And that range had risen from $24-$26 last week.
In a hungry world, anything related to agribusiness is a hot investment idea these days. It has helped Intrepid that a major rival -- Potash Corp. of Canada -- has been one of Wall Street’s biggest winners of the last five years, and closed today at yet another record high of $208.79 a share. Intrepid will begin trading Tuesday on the New York Stock Exchange under the ticker IPI.
As for Digital Domain, it’s still hoping to sell 6 million shares at $12 to $14 each. But IPO-market analysts say the deal hasn’t generated a lot of hype on Wall Street since the terms were announced on April 7.
The company, which has been racking up operating losses since 2005, wants to develop its own feature films and also push into video-game development and production.
The stock (which will trade under the ticker DTWO) could pop a bit if underwriter Thomas Weisel Partners has done a decent marketing job, and if the stock market overall trades higher. But no one is expecting investors to step up the way they did for Pixar Animation's IPO in 1995. Pixar, fresh off the success of "Toy Story," soared from $22 at the offering to $39 on its first trading day. The company was bought by Walt Disney Co. in 2006.
Photo: A Transformer. DreamWorks LLC/Paramount
Posted April 21, 2008
Digital Domain, one of Hollywood's top special-effects shops, is ramping up its plans to go public.
The Venice-based company, which created special effects for films including "Titanic," "Pirates of the Caribbean: At World’s End" and "Transformers," hopes to sell 6 million shares at $12 to $14  each, according to the updated prospectus the firm filed today with the Securities and Exchange Commission.
Read the filing here.
The company, whose roots go back 15 years, was purchased in May 2006 for a reported $35 million by an investment group that included director Michael Bay. The group first announced plans for a stock sale in December, but many new offerings were sidelined in the first few months of this year by Wall Street’s upheaval.
Digital Domain is well known for its work in feature films and TV advertising. Yet the business has been bleeding red ink: The company lost $20 million last year on revenue of $78 million.
"Since 2004 we have been unable to generate revenues sufficient to be profitable," the firm warns in the prospectus.
Times staff writer Richard Verrier wrote in a profile of the company in May 2007 that "differences among the former owners" -- who included director James Cameron -- "and a lack of investment capital hampered the company in recent years. That allowed rivals such as Sony Pictures ImageWorks, Rhythm & Hues and Peter Jackson's Weta to cut into Digital Domain's core effects business."
"Compounding matters, Digital Domain and other U.S. visual-effects houses have been squeezed by rising labor costs and competition from rivals in Europe and Asia that are able to produce effects at a fraction of the cost," Verrier wrote.
In one good sign for potential investors, none of Digital Domain’s existing shareholders is selling stock in the deal. All 6 million shares would be sold by the company, raising $70 million (after expenses) if the stock is sold at $13 a piece, Digital Domain estimates.
The company says it expects to use $25 million to pay off debt and the rest to expand the business -- including a push into video-game development and production.
The stock would trade under the ticker symbol DTWO. San Francisco-based brokerage Thomas Weisel Partners is leading the underwriting group.
Photo: ParamountPictures/20th Century Fox
Posted April 7, 2008
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Tom Petruno
Tom Petruno has been chronicling financial markets' highs and lows since 1979, and has been the Times' financial columnist since 1990. He writes on markets, corporate finance and the economy, and how it all ties in to individual investors' portfolios.
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