Williams IPO fails to excite

Shares close 2 cents below asking price

September 21, 2005|By Paul Adams | Paul Adams,Sun reporter

Investors gave Williams Scotsman International Inc. a tepid welcome yesterday as the White Marsh-based maker of modular buildings and temporary classrooms launched its initial public offering with the hope of raising more than $250 million to help repay debt.

The company's shares closed 2 cents off Williams' asking price of $16, to close at $15.98 in their first day of trading yesterday. More than 7.3 million shares were traded. The company, which had originally targeted a price of between $16 and $18, filed to sell 15.3 million shares. It said it expects to close the offering Friday.

The lukewarm response to the company's first public stock sale came despite improving fortunes for the modular building industry and expectations that such firms could get a boost from reconstruction efforts along the hurricane-ravaged Gulf Coast. Williams Scotsman saw its sales climb after a series of hurricanes hit the Southeast last year, and it continues to own a toll-free "hurricane hotline" to assist parties in search of temporary office or storage space.

With 2004 sales of just under $500 million, Williams, traded under the ticker symbol WLSC, is one of the nation's largest providers of modular buildings and storage units. The 50-year-old company has 85 branch offices and owns a fleet of 97,000 modular units used as on-site office space for construction firms, temporary classrooms for schools or office and storage space by expanding businesses.

Modular offices, which are typically built in a factory and delivered in pieces, are marketed to hospitals, the military and other buyers that need buildings quickly and cheaply. The Modular Building Institute, a trade group based in Charlottesville, Va., estimates that industry sales in 2003 exceeded $4 billion.

"They're a leader in the industry and they've been around for years," Steve Snyder, executive director of the Modular Building Systems Association, a Harrisburg, Pa., trade group that represents the residential side of the industry, said of Williams. Low interest rates have spurred sales across the industry, he said.

But Williams has struggled with debt of more than $800 million as it seeks to expand through acquisitions. The company reported a loss of $3.5 million for the first six months of this year. It lost $3.4 million last year and $11.7 million in 2003 in the face of an economic downturn.

Company officials declined to comment yesterday, saying that Securities and Exchange Commission rules prevent them from discussing business until after the offering.

In addition to the stock sale, Williams has filed to raise an additional $350 million through a debt sale, with the proceeds being used to refinance debt due to mature over the next few years.

The company's history in Maryland dates to the mid-1940s, though it wasn't officially incorporated until 1955. Its first product was an 8-foot-wide construction trailer delivered in 1944.

Williams Mobile Offices and California-based Scotsman Manufacturing Co. - a provider of space solutions for the film industry and others - merged in 1990 to form the current company. Scotsman management and other investment partners own a majority of the shares.

The company has been on an acquisition spree in recent years, buying more than 30 regional mobile space providers nationwide and investing in the second-largest modular space provider in Spain. Company officials have said they plan to continue expanding in Europe.

paul.adams@baltsun.com

Profile

Company: Williams Scotsman International Inc.

Headquarters: White Marsh

Products: Temporary classrooms, mobile and modular offices, storage units

Number of branches: 85

Customers: About 25,000

2004 sales: $498 million

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