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Fine Air IPO grounded
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August 8, 1997: 2:39 p.m. ET
Stock offering rescinded after crash; carrier hopes to re-market issue
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NEW YORK (CNNfn) - Fine Air Services Inc., the Miami-based freight carrier that went public one day before one of its DC-8 airplanes crashed, killing four people, has grounded its initial public offering.
As investigators sifted through the ashes and interviewed witnesses to find cause for the disaster, Fine Air said Friday it decided with its financial advisors to rescind its offering, which raised $123 million.
"We are mindful that the company's stock began trading only two days ago and that there may be concern in the investment community about the effect of the accident on the company," Fine Air President Barry Fine said in a statement.
Fine Air shares (BIGF) tumbled 1-3/8 to 14-1/2 Thursday before Nasdaq halted trading in the stock. The offering, led by Alex. Brown, was scheduled to settle on Monday, Aug. 11. All transactions will now be reversed and money will be returned to investors.
Although highly unusual, the move doesn't set precedence. Since 1992, two other companies have withdrawn their initial public offering after the shares came to market, including the restaurant company owned by basketball legend Wilt Chamberlain.
Fine Air and its underwriters said they plan to re-market the stock offering after investors get enough to time to determine if they think the crash will materially affect the company. Officials said they hope to return to the market within 30 days.
"As soon as possible we will go to it again,'' said A. B. Krongard, chairman and chief executive of Alex. Brown.
Fine Air said management believes the accident will not have a material adverse impact on the company.
The DC-8, one of 15 in Fine Air's aging fleet, was fully insured. The company said it has "more than adequate" liability insurance to satisfy any claims arising from the accident.
In addition, the carrier's remaining 14 aircraft are expected to provide adequate lift capacity for its current needs.
-- Robert Liu and Allan Dodds Frank
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