February 21, 2005 – (HOSTSEARCH.COM) – Clarence Briggs, founder and chief executive of Advanced Internet Technologies Inc. , said the downtown Fayetteville company is preparing for an initial public offering in 2006. The Web hosting company aborted plans for an initial public offering in 2000, after the Nasdaq stock exchange plummeted and investors pulled out of high-flying technology stocks.
Briggs said the timing is right to go public.
AIT wants to raise a minimum of $40 million through an initial public offering, and then have both equity and debt instruments available, said Briggs.
Briggs said there are several other advantages to the move.
As a publicly traded company, Briggs said, AIT could access the public markets by selling shares and using proceeds from those sales to grow the business.
And it could more easily expand through acquisition, using publicly traded stock to purchase other companies.
AIT borrowed $4 million from Bank of America in December, the first of several rounds of debt financing planned for 2005. The money is intended for investment in the business. AIT says it wants to look good to potential investors.
The company may also raise money this year through a private placement, the sale of unregistered shares of stock that are not publicly traded. Investors must qualify or be accredited under Securities and Exchange Commission rules. For individuals, that essentially means a personal worth of $1 million or an annual income exceeding $200,000.
"Our balance sheet is strong, and the time is right for aggressive growth, so AIT can take a run at the public markets," Briggs said. "If we can achieve our goals this year through organic growth and acquisition, we will be in position to IPO by 2006. AIT has had almost no outside equity or debt investment. The money involved in this initial round of financing will be invested back into AIT, building infrastructure and hiring top talent."
Garage-built
AIT was the brainchild of Briggs, a former Fort Bragg soldier who began the company in his garage in 1996, designing Web pages with some Army buddies.
Today the company employs between 130 and 140 people at 421 Maiden Lane. The company says it has about $30 million in annual revenue.
AIT has expanded into areas such as electronic commerce. It has also consolidated, pulling out of several subsidiary companies it owned before the 2001 recession.
Taking the company public will be a long and somewhat costly process.
John Fogg, a lawyer who specializes in initial and secondary public offerings at Hutchison & Mason, a Raleigh law firm, said bankers typically take 7 percent of the capital raised. Legal and accounting costs can range from $750,000 to $1 million, he said. Nasdaq fees are about $100,000, he said, and printing fees are $200,000 to $250,000.
Companies interested in being traded publicly hire an investment bank, called an underwriter, to be the adviser and distributor. The underwriter acts as the middleman between the corporation and the public.
AIT has not chosen an underwriter for its public offering.
Once a company makes a public offering, it is subject to public disclosure requirements.
A registration statement must be filed with the SEC that includes a description of the business, biographical material on the officers and directors, the amount of shares each insider owns and complete financial statements.
Companies make money from the sale of the initial stock only.
Prior to sale, company officials and their bankers market the company to accredited investors, investment banks and mutual fund companies.
Factors in AIT's initial public offering will be its timing and its ability to distinguish itself from other Web host companies.
AIT competitor Interland Inc. went public in the summer of 2000, a difficult time for a technology company.
At the end of its first week of trading, Interland's shares, which never rose above their opening price of $12, were below $8 per share.
