A Disappointing IPO for Jorgensen

The stock of Lynwood metal products distributor Earle M. Jorgensen Co. fell flat on its first day of trading Friday.

The company’s shares, priced at $10 apiece the night before, ended the day at $9 on the New York Stock Exchange.

The stock was priced below the expected range of $11 to $13 a share, which had been lowered after Jorgensen couldn’t get the deal done Wednesday within an original range of $14 to $16 a share.

For years one of the Southland’s largest privately held companies, Jorgensen was hoping to raise $300 million in its initial public offering. Instead, the company raised roughly $176 million, selling just 17.6 million shares instead of 20 million. The money is to be used to buy out the holders of the company’s preferred stock, which is held mostly by management.

Several factors hurt the IPO, including the fact that investors were concerned that the proceeds weren’t being used directly to expand the company, said David Menlow, president of IPOfinancial.com in Milburn, N.J.

Another problem was the difficult metal market that Jorgensen is likely to face this year, with steel prices expected to decline, analysts said.

The company, with more than 1,600 employees, was founded by Earle M. Jorgensen, who came to Los Angeles after World War I and started combing shipyards for scrap metal. Jorgensen, who became a member of President Reagan’s so-called kitchen cabinet, died in 1999 at age 101.

The company’s profit in the year ended March 31 soared to $15.2 million from $2.3 million a year earlier on a 13% increase in sales to $1.04 billion.