TORONTO — Husky Injection Molding Systems Ltd. plans to go public, it announced Sept. 20.
The Bolton, Ontario, producer of molds, injection presses and robots said it will use the proceeds from an initial public offering to increase capacity, expand its service and sales network, and reduce debt.
Husky, which filed a preliminary prospectus with Canadian securities officials but has not registered its common shares in the United States, did not disclose the value or timing of the offering.
The firm's vice president of corporate affairs, Dirk Schlimm, said he could not comment beyond a news release because of quiet-period regulatory requirements. For the same reason, Husky President and Chief Executive Officer Robert Schad declined to comment when asked about the IPO Sept. 24 during the grand opening ceremony of the firm's new plant to make hot-runner systems in Milton, Vt.
Husky could raise as much as US$200 million in the issue and sell 25 percent of its shares to the public, according to Scot Martin, managing director of ScotiaMcLeod Inc., one of two Toronto-based lead underwriters. The number of shares Husky issues and their price will depend on stock market conditions.
Husky will monitor those conditions in late October. If they are favorable, it will issue common shares and close the issue by early November, Martin said. The firm recognizes that market conditions now are not optimal and it is not desperate for cash, he added.
Komatsu Ltd. will offer a secondary issue of Husky shares coinciding with Husky's IPO, Martin said. Komatsu now holds 11.4 percent of Husky stock and could sell as much as two-thirds of its stake. Komatsu, a heavy-equipment maker in Tokyo, once considered getting into injection molding equipment and invested strategically in Husky several years ago. It since has decided not to pursue injection molding, according to Martin.
Schad, who has been Husky's president and CEO since founding the firm in 1953, will retain a majority stake. He now holds 60.1 percent of Husky's common shares. Another 103 employees own 13 percent of the stock.
One analyst questioned whether the proposed board of directors is independent from Schad's influence. David Bisset, president of Bissett & Associates Investment Management in Calgary, Alberta, said a certain amount of independence is needed to represent shareholders properly.
In addition to Schad, the board includes Husky Chairman Lawrence Tapp, who is Dean of Richard Ivey School of Business in London, Ontario; Shad's wife, Elizabeth Schad; Eric Russell, a partner in Toronto law firm Miller Thomson; Robert Gillespie, chairman and CEO of General Electric Canada Inc.; Richard Roswech, Asheville, N.C.-based president of Roswech Management Consultants for the plastics industry; and Komatsu President Satoru Anzaki.
Husky recorded net profit of US$45.9 million on sales of US$762 million for the year ended July 31. Its total assets are worth US$577.1 million and it carries US$79 million in long-term debt. Shareholders' equity is worth US$219.3 million and the firm's total capitalization is US$299.7 million.
The company claimed it is the global leader in injection presses for PET preforms, holding more than 50 percent of the market. It predicts this market will grow 13 percent a year. The global market for PET preform molds, presses and robots was about $800 million in 1997, Husky estimated in its preliminary prospectus.
Husky has boosted its production space by 60 percent, or 650,000 square feet, in the past year. Its plants are in Bolton; Dudelange, Luxembourg; and Milton, Vt.; and it leases space in Pittsfield, Mass., to assemble large-tonnage machines.
The company has 33 offices in 25 countries staffed with its own employees. It employs about 2,600, none of whom are unionized.
Husky spent a total of US$174.7 million on capital expenditures and research and development in its past year.
Schad earned $US9.8 million in Husky's 1998 fiscal year, including a $US9 million bonus. Once the company is public he will be eligible to earn 2 percent of Husky's profit. Husky will pay a special dividend of as much as US$30 million to shareholders before completing the issue.