Boise's Failed IPO To Affect Some Deals, Not Broad Market


May 19, 2005 4:42 p.m.


The withdrawal of Boise Cascade Co.'s initial public offering this week
isn't good news for private-equity firms, but it's unlikely to bring the
broader IPO market to a screeching halt.

The Boise, Idaho, paper-and-wood-products company's decision to pull
its $400 million offering late Wednesday marked the largest share
cancellation since Worldspan Technologies yanked its $645 million
offering in June 2004. Boise Cascade cited adverse market conditions as
the impetus for pulling the deal. The company had struggled to price its
16 million shares earlier in the week, cutting the range $7 from its original
projection of $24 to $26 a share.

While shifting such a large deal to the scrap heap could be interpreted as
a bad omen for the IPO market overall, there are indications that
investors are weary of only certain types of IPOs - namely, those that
result in all the proceeds going to prior private shareholders and to pay
down debt.

Recent deals with a private-equity structure similar to Boise's haven't
done well, including that of PanAmSat Holding Corp. (PA) and Warner
Music Group Corp. (WMG). Lazard Ltd. (LAZ), a deal structured to buy
out the investment bank's owner-partners, is another recent flop that
irked investors.

"There's just some deals that shouldn't get done," said Ben Holmes, a
managing member of Boulder, Colo.-based IPO buyer Protege Funds
LLC, who had panned the Boise deal last week on his Web site, "It's a weight that's been taken off the market."

There are plenty of signs that investors haven't given up on IPOs
entirely. Earlier this week, urban clothing retailer Citi Trends Inc. (CTRN)
priced its 3.85-million-share IPO at the high end of its range, and closed
up 12% on its first day of trading Wednesday. The U.S. stock markets
have been on the rise this week, and four IPOs are on the calendar for
next week from technology companies, a sector that hasn't tested the
market's waters en masse for a while.

"I don't think this has any ramifications whatsoever for the outlook for the
broader market," said John Fitzgibbon, an analyst with

-By Lynn Cowan, Dow Jones Newswires, 202-862-3548;