Air-Bag Maker Offering Raises $13.2 Million : Stock: Safety Components International shares rose almost 23% in value on Nasdaq system Friday before closing at $11.625.
Safety Components International, an automotive air-bag maker, raised $13.2 million Friday in an initial public offering that had investors bidding up the price much of the day before cooling a bit.
The hot stock, which trades on the Nasdaq electronic system, rose almost 23% in value from its $10 offering price before settling down to close at $11.625 a share.
Safety Components is a spinoff of Valentec International Corp., a Costa Mesa company that remains the majority owner with 2.3 million of the new company’s 3.9 million shares. If it holds, Friday’s price run-up added $4.2 million to the value of Valentec’s stake in its subsidiary.
“We’re very happy with they way it went,” said W. Hardy Myers, chief financial officer of both companies.
Safety Components was formed by combining Valentec’s auto air-bag unit and a small metal fabrication subsidiary in Ohio. The new company said in its prospectus that it intends to use proceeds from the stock sale to pay down the bulk of its debt and increase manufacturing capacity to handle anticipated growth in the air-bag market.
The company makes more than 2 million air bags a year and estimates that its production could double by 1997. It employs about 550 people at factories in Mexico and Europe and at a small fabric-cutting facility near its Costa Mesa headquarters. Its air bags are used in systems that TRW markets to Ford and its Lincoln-Mercury division and to Toyota and Mazda in Japan and Mercedes Benz, BMW, Audi and Volkswagen in Germany.
Had Safety Components been a separate business in the final quarter of 1993, it would have posted a $146,000 profit on revenue of $6 million, compared to an $356,000 loss on sales of $2.2 million in the last three months of 1992, according to the company’s prospectus.
While air bags are mandatory for most cars in the United States, they are an extra-cost option in Europe and Asia. Competitive pressures, however, have made the safety device a popular item overseas, and car companies in those countries are increasing their orders for air-bag systems.
Investor reaction to Friday’s public offering showed there is strong faith in the future of the air-bag market and that, in turn, signals a renewed faith in the economic recovery that must occur to spur worldwide production of the autos that use air bags.
Safety Components is one of several vendors supplying air bags to TRW Vehicle Safety Systems Inc., which is one of the world’s major manufacturers of completed air-bag systems.
Hampshire Securities Corp. in New York, as underwriter for the offering, guaranteed the sale of the stock. It holds a 30-day option to buy up to 240,000 additional Safety Components shares, 160,000 from the company and 80,000 from Valentec.
