IPO Alert: National CineMedia Sets IPO Terms

National CineMedia’s IPO terms are set and it is closer to coming to market.  We already had the filing for an original IPO, and now we have the terms.  The company will be selling 38 million shares in a range of $18.00 to $20.00 under the "NCMI" ticker on NASDAQ.  Underwriters have a 4 million share overallotment option.  The company will have 93.8+ million shares and units on a fully diluted basis.

Here is the full amended filing, and you need to read the caveats on the company structure since this is not exactly a straightforward IPO like others where it would be (example only) say 30 million shares of an operating company that gives a $300 million offering and a $1 Billion market cap.  This is the holding company that holds 40.5% of the common membership units in National CineMedia, LLC, NCM LLC.  Its founding members AMC Entertainment Inc., Cinemark, Inc. and Regal Entertainment Group will own the remaining 59.5% of the common membership units in NCM LLC.  So if you wanted to draw an analogy it would be similar to comparing this to LLC membership units in an oil interest that owns part of a pipeline.  You really need to read through the filing so you understand what you are investing in if you like IPO’s. 

National Cinemedia is not exactly a movie theatre chain.  It is the live event and in-house broadcasting operator that is a partnership among theatre chain owners, and you are essentially buying a minority interest in that LLC.  It is a fascinating business that may grow but you are basically purchasing a minority interest in a royalty stream.  So don’t go into this thinking you are buying into the operating company or into a movie theatre chain.

To demonstrate how complicated this IPO is, you should see how large the underwriting group is.  The lead underwriters are Credit Suisse, J.P.Morgan, Lehman, and Morgan Stanley; others in the syndicate are AGM Securities, Allen & Co, Banc of America, Bear Stearns, Citigroup, Deutsche Bank, Goldman Sachs, Merrill Lynch, and UBS.

Jon C. Ogg
February 6, 2007