Mitel files $230M IPO

Krystle Chow
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Mitel Networks Corp., one of the last remaining stalwarts of Silicon Valley North, is making its second go at an initial public offering, in what could be Ottawa’s largest-ever outing on the stock markets.

Mitel building

The telecom equipment maker, which was founded by local tech veterans Michael Cowpland and Terence Matthews in 1972, said in a preliminary prospectus filing with the U.S. Securities and Exchange Commission that it plans to raise up to $230 million in its IPO.

No pricing details have been released.

When contacted, a Mitel spokesperson responded in an e-mail that the company would not be giving interviews at this time.

The company named BofA Merrill Lynch, J.P. Morgan and UBS Investment Bank as the lead underwriters in the offering.

This is Mitel’s second try at an IPO; a 2006 attempt was interrupted by the company’s merger with Arizona’s Inter-Tel. At the time, the company had valued itself at up to US$150 million.

Mitel said in its filing that it hopes to use the proceeds from the IPO largely to repay its debt, including $30 million owed under its revolving credit facility. It also has a first-term lien loan with an outstanding principal amount of $289 million, the filing showed.

The firm told OBJ earlier this year that it expected to complete its public offering before the 2014-15 deadline to pay down its $425-million long-term debt, and said the one factor delaying its IPO was the weakness of the financial markets.

The company could have taken advantage of the fact that Inter-Tel was already public, but Mitel’s chief financial officer Steve Spooner said it was a “conscious decision” to stay private so that the firm could prove its new operating model.

Mitel earned $735.1 million in revenues in its fiscal 2009, up 6.2 per cent from the previous year, and it had a net loss of $193.5 million or $1.09 per share, compared with a $12.6-million profit a year earlier and a per-share loss of 45 cents.

The filing also showed the company had cash and cash equivalents of $28.4 million at the end of its last fiscal year.

Mitel has made a fairly successful transition toward its current focus on Internet protocol-based telephony solutions, netting major customers such as the Philadelphia Phillies Major League Baseball team and shipping out more than 120,000 IP-based appliances since introducing the systems in 1999.

It said it hopes to continue capitalizing on the continued shift away from legacy telephony infrastructure, pointing in its filing to a September 2009 Gartner report that said the global enterprise IP telephony market is expected to grow by a compound annual growth rate of 12.3 per cent, from $7.4 billion in 2009 to $11.8 billion in 2013.

Mitel also provides unified communications and collaboration solutions that integrate voice, video and data communications with business applications, as well as managed and network services.

Organizations: U.S. Securities and Exchange Commission, Arizonas Inter-Tel, J.P. Morgan and UBS Investment Bank

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