The original version of this story incorrectly identified Apollo Global as the owner of Dave & Busters.
Apollo has a track record of buying companies, loading them up with millions in debt and then dumping them on the public. Bankers, though, may be getting tired of being Apollo's enablers as the offerings are beginning to get pulled. Who wants to jeopardize customer performance to keep Apollo happy?
Realogy is the next big offering on the way from Apollo. It too has great name recognition. The company is home to some of the most famous real estate brokerages, brands like Century 21, Better Homes & Gardens, Coldwell Banker and Sotheby's International. Realogy is hoping to raise $1 billion and price its shares between $24 and $26 with a planned launch on Oct. 11.If the IPO goes off as planned, Realogy will have a net worth of $1 billion, but also debt totaling $4.56 billion. That's a lot of houses to sell. But Apollo says, not to worry. Why? Realogy has a net operating loss of $2.1 billion that it can use to offset tax liabilities related to future income. That will allow the company to use more of its cash flow to pay down debt. Realogy and its new investors, though, will be at the mercy of the housing market, hardly a stable business since the financial crisis. Let's look back at another Apollo deal that has followed this strategy: Caesars Entertainment (CZR). The giant gambling concern was taken private by Apollo and TPG in 2008. They piled on $12 billion debt and then suckered some investors into buying the stock. The stock went public in February with shares price at $9 each. The stock nearly doubled shortly after its debut but it has since steadily deteriorated, closing this past Friday at $6.58. Caesars missed out on the Macau market and is now looking to India as a source of growth. Otherwise the company is completely dependent on Las Vegas and Atlantic City. Another IPO sold on a hope and a prayer. The big winners with Caesars are bond holders that are earning yields of 15%.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV