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IPO market starts off fresh
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June 2, 2001: 7:00 a.m. ET
Torch Offshore and Unilab Corp. set to surge as four IPOs to open this week
By Staff Writer Luisa Beltran
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NEW YORK (CNNfn) - The initial public offering market could see the launch of four new issues this week, with yet another energy deal set to heat up, while the IPO from a clinical testing firm may prove to be a sleeper.
No new issues opened last week in a spotty time for the broad market. For the week, all three major indexes finished lower. The Nasdaq fell 4.5 percent, the Dow slipped 0.13 percent, while the S&P shed 1.3 percent.
However, the choppiness will likely not affect offerings, said John Fitzgibbon, editor of Gaskins IPO Desktop. "I do not think the stock market will be any deterrent to the IPO machinery," he said. "We've been marking time since our sharp rally three weeks ago."
New issues will attempt to retain the leverage gained earlier this month when offerings from Peabody Energy Corp., Instinet Group Inc., and Global Power Equipment Group all produced strong premiums.
Peabody (BTU: Research, Estimates), one of the world's largest coal companies, climbed nearly 31 percent in its debut, while electronic stock market operator Instinet (INET: Research, Estimates) gained 40 percent and Global Power (GEG: Research, Estimates), a gas turbine maker, surged 57 percent.
According to data from MCM CorporateWatch, which tracks new issues, four IPOs are expected this week.
Energy will get another chance to glow with the IPO from Torch Offshore, a provider of sub-sea construction services that help customers develop natural gas reservoirs on the continental shelf of the Gulf of Mexico. Clientele include major energy firms such as Coastal Oil and Oceanografia.
The strong debuts of Global Power and Peabody will give Torch a boost, analysts said.
"Energy in general has been very solid," said Corey Ostman, co-CEO of Alert-IPO.com.
But Torch has a rather rocky financial history, earning nearly $39 million in 1997 and $39.2 million in 1998 while losing $9.9 million in 1999 and $1.3 million in 2000. However, the firm is set to be profitable this year, said David Menlow, president of IPOfinancial.com.
"They have somewhat of an inconsistent earnings history," Menlow said. "Since more [energy] deals are coming down the pipe, maybe you don't need to have this one."
Because of the lack of supply of IPOs in general, Torch should score a sizeable premium, perhaps 15 percent-to-20 percent in its debut, analysts said.
Gretna, La.-based Torch plans to offer 5 million shares at $14-to-$16 each via lead underwriter UBS Warburg. Torch plans to price Wednesday for trade Thursday under the Nasdaq symbol "TORC."
The sleeper
With all eyes on energy, Unilab Corp., involved in health-care concerns, may prove to be the sleeper of the week's IPO offerings, analysts said.
Unilab, one of the largest clinical lab testing companies in California, provides services to physicians, hospitals and managed care groups to treat and monitor diseases. Tests range from simple glucose monitoring to specialized ones that measure HIV infection and hepatitis C.
Tarzana, Calif.-based Unilab is also profitable with $3.2 million in income on $95.3 million in revenue for the quarter ended March 31.
Analysts generally expect a good first day performance from the test services firm. Fitzgibbon of Gaskins IPO Desktop gives Unilab three stars and expects a premium of $2 in the first day. "Health care has done really well," added Alert-IPO.com's Ostman.
"The sector is doing well," analyst Steve Tuen of IPO Value Monitor agreed. "But they're highly leveraged. There will be a decent premium, around 10-to-15 percent, but not a blockbuster."
Unilab plans to sell 6.7 million shares at $14 to $16 each via lead underwriters Salomon Smith Barney and Credit Suisse First Boston. Unilab plans to price Tuesday and trade Wednesday under the Nasdaq symbol "ULAB."'
After the IPO, buyout firm Kelso & Co., through Kelso Investment Assoc., will own 57.4 percent.
Health care a good bet
Another good showing could come from United Surgical Partners International Inc. which operates surgery centers and private surgical hospitals in the United States, Spain, and the United Kingdom.
Dallas-based United Surgical has ownership interests in 27 U.S. surgery centers and one private surgical hospital while also managing five U.S. surgery centers. Such facilities cater to patients that do not require extended hospital stays.
The firm had $7.3 million in income on $53.8 million in revenue for the March quarter.
"The company is growing rather nicely," said IPOfinancial.com's Menlow. "This sector of the market has been doing well."
United Surgical plans to offer 9 million shares at $13 to $15 each via Credit Suisse First Boston. The company plans to price Wednesday and trade Thursday under the Nasdaq symbol "USPI."
Lastly...
Alliance Data Systems Corp. will also attempt to go public this week but analysts don't have the best of hopes for the offering. Alliance, a business-to-consumer play, is a holdover from the IPO heyday of last year.
Dallas-based Alliance provides electronic transaction, credit and marketing services to retail firms such as the Limited Inc. (LTD: Research, Estimates).
Alliance originally filed in January 2000 for an IPO that was expected to raise $300 million. The B2C firm has since scaled back and plans to now sell 13 million shares at $12 to $14 each via Bear Stearns and Merrill Lynch.
"This will be very interesting to watch," said Alert-IPO.com's Ostman. "B2C is still very much out of favor."
Ostman expects Alliance to cut its terms. The IPO is expected to price Thursday and trade Friday under the New York Stock Exchange symbol "ADS." 
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