Investors think Aether is golden

Hot company raises $1.4 billion with secondary offering

Stock offerings

March 18, 2000|By Mark Ribbing | Mark Ribbing,SUN STAFF

Aether Systems Inc., an Owings Mills wireless data company that has become a Wall Street darling, yesterday raised $1.4 billion with a secondary offering of common stock that helped push its share price up more than 12 percent.

The issuance of the 6.3 million new shares came only five months after Aether's initial public offering Oct. 21, which was priced at $16 per share. Since then, the company has benefited grandly from investors' fascination with wireless communications technology.

For the secondary offering, a price of $205 per share was established Thursday night, and the sale was expanded from 3 million shares in order to accommodate the anticipated demand.

As of yesterday's close, Aether's stock stood at $236.0781, up $26.7656 for the day.

Aether, which makes software that allows hand-held computer devices to transmit and receive instant text messages and other data, has used acquisitions and joint ventures to broaden its market.

When Aether filed for its secondary offering with the Securities and Exchange Commission, the company indicated that funds from the offering would be used to continue this strategy.

For example, $100 million of the take will be used to pay for a 60 percent interest in a joint wireless venture with Reuters Group PLC. Another $19 million will repay debt from the acquisition of LocusOne Communications Inc. Aether wrote in its SEC filing that it intends to use part of the remaining proceeds for "potential future acquisitions and strategic investments."

"We are going to continue to be aggressive about growing through a combination of -- hiring, joint ventures and acquisitions," said Brian W. Keane, Aether's vice president for business affairs who cited the continuing strength of the stock market as a major reason for the timing of the sale.

The secondary offering is only part of Aether's current bid to cash in on investors' bullishness. Yesterday, the company sold $310.5 million in debt notes that can be converted into stock. In addition, Aether released a letter asking shareholders to approve an increase in the amount of stock the company can issue from the current 75 million shares to 1 billion shares.

The company said some potential uses for the additional shares would be stock splits, dividends, and acquisitions. Aether's shareholders will vote on the matter at their annual meeting April 28.

When asked if all of these new shares might dilute Aether's stock value, Riyad Said of Friedman, Billings, Ramsey & Group Inc. in Arlington, Va., one of the firms that managed Aether's stock and debt offerings, said the company's honeymoon is likely to continue.

"There is clearly an opportunity in the investment community for companies like Aether that are really taking leadership positions in the new segments of the market," said Said.

Pub Date: 3/18/00

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