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Frederick’s U.S. Silica plans $200M IPO
U.S. Silica Co., the privately held, second largest domestic producer of commercial silica, said Monday it was planning a $200 million initial public offering.
The Frederick-based company announced the IPO and said shares would be listed on the New York Stock Exchange. The prospectus, filed with the Securities and Exchange Commission, did not list a potential stock symbol.
A spokesman for U.S. Silica said the company would not comment beyond what was in the prospectus, a standard practice in initial offerings.
U.S. Silica, founded in 1900, had 662 employees at the end of March, according to the IPO filing. It operates production facilities in 13 states including West Virginia, Oklahoma and Illinois. It controls 283 million tons of reserves.
The company is a subsidiary of Golden Gate Capital, a San Francisco-based private investment firm. Golden Gate Capital holds stakes in Herbalife, Zale Corp. and Express as well as On the Border restaurants. The firm also bought the assets of retailer Eddie Bauer and has a majority stake in the Romano’s Macaroni Grill restaurant chain.
For the quarter ending March 31, 2011, U.S. Silica reported net income of $3.5 million on $64.4 million of sales. This compares to $341,000 in net income on $55.3 million of sales for the same quarter in 2010. During the quarter, the company reported selling 1,468 tons of sand compared to 1,389 tons during the first quarter of 2010.
U.S. Silica has been growing its stake in selling sand designed for use in hydraulic fracturing, or fracking, where sand, water and other chemicals are injected into rocks to get to natural gas reserves. According to the filing, 28 percent of revenue came from fracking sand sales to companies including Schlumberger Ltd., Halliburton Company and Baker Hughes, Inc.
Its reliance on fracking income was listed as one of the main risk factors for investors interested in buying shares. The company warned in its IPO filing that a slowdown in fracking activity or the appearance of another product could impact sales.
Several states, including New York and Maryland, have commissioned studies of the economic benefit of fracking versus environmental issues.
In addition to providing silica for fracking, U.S. Silica produces sand for recreational uses like its Beach White Volleyball Sands, which were designed for sand volleyball courts. Commercial silica is also used in glassmaking and chemical manufacturing.
In its filing, U.S. Silica said it planned to use the proceeds for general corporate purposes and to possibly finance acquisitions. A date for the offering was not included.
