Advanced Disposal Delays IPO

[TheCat]

Just 10 days after it announced its initial public offering, Advanced Disposal Services Inc. delayed its pricing, citing unfavorable equity market conditions.

While the company said in its statement it would continue to evaluate its IPO as market conditions develop, experts are saying it could be some time before the Advanced Disposal gets its window of opportunity again.

"The overall stock market is very negative," said Kathleen Smith, a principal at Renaissance Capital, a manager of IPO-focused exchange traded funds. "It would have been a big success if it could have pulled this off, given the negative market dropoff. But for right now, the IPO market is somewhat closed for business."

While the market is down, Smith said many investors are looking at existing stocks that can be an opportunity, and are less interested with new stocks.

"In simple terms, the company is putting off its public offering due to current stock market conditions," said Brian Hamilton, chairman of Sageworks, a financial information company. "Major U.S. stock market indexes are down and it is likely that the company does not anticipate being able to maximize its stock price and market cap in these conditions."

When the company made its announcement, it was offering about 21 million shares for a target price of about $21 per share. The company is backed by a private equity firm, Highstar Capital, which was likely pushing going public to get a return on its investment.
What is more, Smith said Advanced Disposal is a leverage company, and investors are wary about companies that carry that kind of debt.
"They have debt, and it's in their interest to refinance that debt," she said. "It's more expensive to borrow, and there's some incentive in that regard [to go public' to reduce their borrowing cost."

Although Advanced Disposal went public as an opportunity to gain more capital, timing wasn't on the company's side. When the company made its announcement, with the work preceding the official announcment, the market was already on a downslide.

http://www.bizjournals.com/jacksonville/blog/morning-edition/2016/02/why-advanced-disposal-delayed-its-ipo.html