In a sign that initial public offering plans at Skullcandy are progressing, the maker of audio headphones and accessories targeting the action sports and outdoor lifestyle space indicated that it plans to sell 8.33 million shares in its IPO at between $17.00 and $19.00 per share.
With the company selling about half those shares, Skullcandy expects to raise $66.6 million after deducting underwriting expenses, based upon an assumed IPO price of $18.00.
Proceeds received by the company will be used to repay the outstanding balance on its unsecured subordinated promissory notes, which was approximately $16.7 million as of March 31, 2011; pay the additional consideration of $17.5 million pursuant to its securities purchase and redemption agreement; and to pay approximately $4.4 million in accrued interest that must be paid in cash upon conversion of its convertible note. The remainder will be used for working capital and other general corporate purposes.
The company is selling 4.17 million shares while selling shareholders are selling the same 4.17 million shares. But underwriters also have a 30-day option to purchase up to an additional 1.25 million shares from certain selling stockholders at the IPO price less the underwriting discounts and commissions. After the offering, Skullcandy will have 26.7 million shares.
Assuming underwriters exercised the over-allotments in full and the deal was priced at the maximum proposed offering price of $19, the IPO will raise $182.1 million in total. This represents an increase from the original filing back in January when documents stated the offering would raise up to $125 million.
Selling shareholders include Ptarmigan LLC, offering 968,582 shares before underwriter’s over-allotment sales; Goode Skullcandy Holdings LLC (Goode Partners), selling 1.08 million shares; Frank & Sarah Johnson Family Living Trust, 447,188 shares; Mercato Partners, 423,290 shares; Caspian Private Equity, 213,304 shares; and JA Cropston (managed by Skullcandy’s CEO and president Jeremy Andrus and his father, Brent Andrus), 190,023 shares.
Jeremy Andrus, also a 2011 SGB 40 Under 40 honoree, plans to sell 230,358 shares in the offering while Rick Alden, who founded the company in 2003 and is now a director, is looking to sell 133,087 shares. After the offering (assuming underwriters dont exercise any overallotment options), Jeremy Andrus will own 7.7 percent of the company, and Alden, 3.5 percent. The largest shareholder will be Ptarmigan at 25.3 percent.
The updated filing also noted that on June 2011, Skullcandy entered into an agreement to acquire its European distribution rights for $15 million. In April 2011, the company completed the purchase of substantially all the assets of Astro Gaming, Inc., a maker of gaming headphones, for $10.8 million.
As reported, Skullcandy’s fiscal third quarter sales jumped 65.9 percent, to $36.0 million. It earned $1.1 million against a loss of $808,000 a year earlier.
Skullcandy also said it plans to list on the Nasdaq Global Market under the ticker symbol, SKUL. The date of the IPO pricing has not yet been determined.
