Wall Street's Marathon Man Set to Run Again

In the 1990s, blank-check stock deals got a bad reputation as the investment vehicles of choice for many unscrupulous stock promoters. But this new breed of blank-check IPOs are less barbaric because regulators now require the companies to impose more investor safeguards.

Still, the deals often are best for the founders, who get a ton of stock in return for a minimal investment.

Marathon's offering is particularly notable because it's the biggest blank-check offering filed to date. Moreover, at $300 million, it ranks as one of the larger IPOs of the year.

From Gross' perspective, running Marathon is easy work. After the offering, he will own nearly 20% of the company, even though he invested just $25,000 of his own cash into Marathon, according to the prospectus. With some 9 million shares in his pocket, Gross' meager cash investment translates into $0.0027 a share.

Meanwhile, investors in the IPO are expected to pay $8 for a share and a warrant to buy a future share.

Gross benefits handsomely if the deal is successful. But his risk in running Marathon is basically nothing if the deal falters. He and his two colleagues, Irwin D. Simon and Robert Sheft, can sell shares a year after Marathon completes its first acquisition. For that reason, some are staying away.

« Previous Page

1 2 3

Next Page »