Updated from 1:35 p.m. EDT
Lowering the price range and delaying the trading of an initial public offering several times is never a good sign, especially when those factors are compounded by a change of underwriter. It also doesn't help when the company is under severe pressure of forfeiting additional financing if it doesn't go public by the end of the month.
Thus, it was almost no surprise when shares of
, a provider of capital and management for business-to-business e-commerce firms, opened below their offering price Wednesday.
Finally priced at $9 a share, the bottom of its revised range of $9 to $10, the issue of 14.285 million shares were trading down 1 7/32, or 14%, at 7 25/32 Wednesday afternoon. Divine InterVentures finished down 1 7/32, or 14%, at 7 25/32.
"It really needed short-term financing," said George Nichols, a stock analyst at
. "Since the offering's completed, it helps toward that goal. But it lowered its range and now it's trading below that. It's been labeled as damaged goods and may continue to languish in the after-market."
The company, based in Lisle, Ill., filed for its IPO on Dec. 15. Since then, B2B enterprises and Internet incubators have fallen out of favor, with many potential investors concerned about Divine's limited track record and its dependence on unproven start-ups. Thus, it may be no surprise that the offering has been delayed seven times already, with the range decreased from its high of $13 to $15 a share.
The number of shares offered to the public was also reduced. Initially, Divine expected to sell 50 million shares in the range of $6 to $8. Then, in April, 15.9 million shares were added to the offering. On June 5, the company finally decided to sell about 36 million shares, with 14.285 million going to the public.
is the lead underwriter of the deal, though
Credit Suisse First Boston
was the initial underwriter before Divine's chief executive, Andrew Filipowski, went with an underwriter that said it could bring the company public more quickly. That was an ironic move, in light of the subsequent delays.
"Its urgency centered around boosting its cash for investing in startups and providing a morale boost for employees loaded with stock options -- much needed in the wake of recent layoffs," Nichols wrote in a report last month. "Despite these motives, though, it's still extremely risky for Divine to forge ahead with the offering in this rough market."
Even though Divine had $212 million in cash and marketable securities at the end of March, it is burning through $15 million of cash a quarter and needs the financing promised to it if it went public by the end of July.