Tuesday, September 22, 2009
Toby Shute :: Townhall.com Columnist
Should You Get Charged Up About This IPO?
by Toby Shute
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In my Cleantech Outlook for 2009, I highlighted A123 Systems as a top company to watch. The energy storage firm had filed a registration statement with the SEC, signifying that it was prepping for an initial public offering in the not-too-distant future.

Things were dicey at first, with the firm getting passed overby General Motors and its Chevy Volt plans. April, however, brought a key winwith Chrysler for a line of electric-drive vehicles. A123 subsequently had no trouble raising $69 million from investors including General Electric (NYSE: GE), ConocoPhillips (NYSE: COP), and Qualcomm (Nasdaq: QCOM).

On the grid storage side of the business, A123 has gone on to garner further interest from firms like Southern California Edison, which is looking to pursue a pair of smart grid projects with a group including Cisco Systems (Nasdaq: CSCO), IBM (NYSE: IBM), and SunPower (Nasdaq: SPWRA) (Nasdaq: SPWRB).

A123's next hurdle was landing a loan guarantee from the Department of Energy, but the company's selection to build a new plant in Michigan seemed like a no-brainer to me. The firm won a $249 million grant in August. Having been given the government green light, and a slew of state incentives to boot, A123's expansion is moving forward. Hence the proposed IPO under the Nasdaq ticker "AONE," set for later this week.

The buzz is clearly building -- A123's estimated initial offering price was today increased from a range of $8 to $9.50 to a heartier $10 to $11.50. Let's take a look under the hood before that first day of trading really gets everyone's motor running.

Since it commercialized its first battery products in 2006, A123 has generated $154 million in product revenue. If you include R&D revenue, the total jumps to $188 million. Nearly 23% of that total revenue figure came in the first six months of this year, which conveys the heady growth being generated by this battery biz.

Adjusted for the expected offering of 25 million shares at a midpoint price of $10.75, here's what A123's core stats will look like:

Share Structure and Capitalization

Numbers

Shares Outstanding

96.8 million

Market Capitalization

$1,040.8 million

Cash and Equivalents

$362.6 million

Debt Continued...

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About The Author

Toby Shute is a Motley Fool contributor.

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