Petersen Reduces Amount of Its IPO

Petersen Cos., the publisher of Hod Rod, Teen, Motor Trend and Guns & Ammo magazines, reduced the amount of its initial public offering to $100 million. The Los Angeles-based company said in an amended registration filed with the Securities and Exchange Commission last week that it plans to sell 6.25 million shares at $15 to $17 each. If the shares sell for $16 each, Petersen expects to raise $92 million after expenses. Petersen executives were marketing the shares to institutional investors and didn’t return calls seeking comment on the change. The $172.5-million figure in the company’s original filing, however, was an estimate used to calculate the SEC registration fee. “It’s not uncommon for companies to reduce offerings when the indicated interest is weak,” said Robert Natale, an equity research director who follows IPOs at McGraw-Hill Cos.’ Standard & Poor’s unit. Another reason a company might decrease a stock offering is if the “new-issues market is difficult,” Natale said, adding that recently the market has become “choppy.” The offering is expensive when Petersen is compared with similar companies, said Lanny Baker, a publishing industry analyst with Salomon Bros. Inc. Based on 1998 earnings estimates, Petersen’s shares would trade at a multiple of about 11 times cash flow, Baker said. That is comparable to K-III Communications Corp., publisher of such magazines as Seventeen, New York and Soap Opera Digest. Petersen will use the sale proceeds to repay debt, the filing said.