Michaels Stores IPO to Repay Massive Debt
It has been nearly eight years since arts and crafts retailer Michaels Companies went private. Now the co-owners have filed for an initial public offering, proceeds to be used to pay down a part of its $3.7 billion in debt.
It has been nearly eight years since Bain Capital Partners and Blackstone Group L.P. (NYSE: BX) took arts and crafts retailer Michaels Companies private for about $6 billion. Now the co-owners have filed for an initial public offering (IPO) of 27.8 million shares of stock in Michaels in a price range of $17 to $19 per share.
At the midpoint of the range, that would raise gross proceeds of $500 million and value Michaels at around $3.7 billion, on about 203 million shares outstanding. Both Bain and Blackstone retain a 40% stake in the company. Prior to the IPO, Bain and Blackstone own about 93.2% of Michaels, and Highfields Capital Management owns about 6.2%.
The soon-to-be public company owns 1,263 stores under the Michaels and Aaron Brothers brands and generated about $4.6 billion in sales in its most recent fiscal year, which ended February 1, 2014. The company posted a net profit of $243 million last year.
The company plans to use proceeds from the IPO to pay down a part of its $3.7 billion in debt, of which $800 million was paid out last year as distribution to the owners. That is the only dividend that Michaels has paid since being taken private.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
