IPO Stocks: Chardon 2008 China Acquisition Corp.

Ann C. Logue | Aug 26, 2008 6:20am EDT | Comment

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(OTCBB:CACAU)
Priced Aug. 11
$53.9 million proceeds
$75.3 million post-money valuation

This special-purpose acquisition company, with a ticker symbol that only a 10-year-old boy could love, snuck onto the IPO calendar earlier this month. The sponsor is Chardon Capital Markets, a boutique investment bank based in New York that specializes in creating SPACs (special-purpose acquisitions companies) and then finding acquisitions for them. One of its earlier SPAC offerings, Shine Media Acquisition (OTCBB:SHND), came public in December of 2006 with the goal of buying a Chinese media or advertising business. On May 6, 2008, it announced that it was acquiring China Greenscape Ltd., a nursery company that cultivates and plants trees and other greenery in public spaces in Chinese cities.

Chardon 2008 China Acquisition Corp. has no industry specialty, other than an intention to find a good business to buy in China.

Lost in the Pipeline

When Shine Media came public, the IPO market was a bit more robust than it is today. And yet, many companies that filed back in 2006 never managed to go public. One of the major drawbacks to a public filing is just that all the information about the business, its profits, and the executives’ compensation is on file with the SEC for all to read, even if the deal never closes. Here are a few of those companies that never came public:

Panther Expedited Services (www.pantherii.com, filed June 2, 2006): Panther is a transportation company, handling expedition and logistics. It does not operate its own trucks but instead contracts with owner-operators, which reduces the company’s capital expenditures. The company had made an acquisition that diluted earnings significantly. The IPO proceeds were to be used to buy back preferred shares held by the firm’s private investors, but with no IPO, they are still involved.

Global Geophysical Services (www.globalgeophysical.com, filed Aug. 10, 2006): This company collects and analyzes seismic data used in oil and gas exploration. After the original IPO filing, Global Geophysical took on some private equity and additional debt. The company is profitable but with thin margins. In 2007, it had revenue of $225.7 million and net income of $2.4 million, but profits are likely to fatten with the current high demand for oil. It has been updating its IPO filing, so it might come public soon.

Ellora Energy (filed Nov. 3, 2006): Ellora develops oil and gas properties in Texas, Louisiana, and Kansas. It came close to going public earlier this summer — and was even mentioned in IPO Watch — but the deal was postponed due to lack of interest.

NY Credit (www.nycredit.com, filed Nov. 13, 2006): It seemed like a good idea at the time: a real estate investment trust that would invest in commercial mortgage-backed securities. NY Credit’s institutional backers included New York Life, Onex Corporation, and Cushman & Wakefield, giving the portfolio managers a lot of clout in the industry. Still, NY Credit never came public. Although the commercial real estate market hasn’t been as bad as the residential one, investors were sufficiently unenthused.