SeaWorld IPO Update

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From Yahoo Finance:

More than three years after its $2.3 billion sale by Anheuser-Busch InBev (BUD) to private-equity giant Blackstone (BX), SeaWorld (SEAS) is trading on the NYSE after raising a reported $702 million in one of the largest IPOs of the year. In its first minutes of trade, the stock is up 15% from its offer price of $27, which was at the top of a range starting at $24.

SeaWorld sold 10 million shares and Blackstone an additional 16 million, more than the 10 million originally slated. The underwriters, including Goldman Sachs and JP Morgan, have a 30-day option to sell an additional 3.9 million shares at the offer price. The deal values SeaWorld at just above $2.5 billion. This debut is part of a busy week for IPOs, which included New York-based grocery chain Fairway (FWM) on Wednesday.

Yahoo mentions the risks (another trainer tragedy, public opposition to orca captivity, and potential OSHA restrictions) that we have covered before, and adds:

When contacted regarding the IPO, a representative for People for the Ethical Treatment of Animals, or PETA, provided its official statement on SeaWorld, which includes its plan to purchase stock Friday in order to “educate other investors about the suffering endured by … animals who are confined to tiny barren tanks for human amusement … and push for their release.”

Other factors investors should keep in mind when deciding whether to dive into SeaWorld stock or stay onshore: The company’s high debt levels and multiples. SeaWorld, when it filed to go public, had $1.8 billion in long-term debt, some of which was incurred by a special dividend of $500 million paid last year to Blackstone (following a $100 million dividend in 2011). SeaWorld states in the filing that its debt could hinder its ability to raise additional capital. Also, its high price tag gives the company a hefty trailing PE of more than 27, exceeding Cedar Fair’s 22 and Six Flags’ 10.99 (per Yahoo! Finance data).

Having PETA attend shareholder meetings is definitely one consequence of going public that SeaWorld will not enjoy.

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