Nov 26, 2003 (09:11 AM EST)
Orbitz Hopes To Raise $82 Million In IPO
Read the Original Article at InformationWeek
WASHINGTON (AP) -- Orbitz Inc., the online travel company, intends to raise $82.2 million through an initial public offering of stock in an effort to beef up its finances and take on larger rivals such as Expedia and Travelocity.
The Chicago-based company, which has not yet set a date for the IPO, will offer 4 million shares priced in a range of $22 to $24 a share, according to a filing Wednesday with the Securities and Exchange Commission.
An additional 7 million shares will be sold in the same price range by a group of stockholders that includes American Airlines, United Airlines, Northwest Airlines, Continental Airlines, and Omicron Reservations Management, a unit of Delta Air Lines.
Orbitz, whose shares will trade under the symbol ORBZ on the Nasdaq Stock Market, was started in early 2000 with seed money from American, United, Northwest, Continental, and Delta. Since then, more than 22 million transactions have been completed at the site, which books airfares, hotels, and car rentals.
Despite backing from the nation's largest airlines, Orbitz warned potential investors that: "Many of our competitors have longer operating histories, larger customer bases, more established brands, and significantly greater financial, marketing, and other resources than we do.''
In the first nine months of 2003, Orbitz had a net loss of $1.4 million on revenue of $172.1 million, the filing said. At the end of September, Orbitz had $71.5 million in cash on hand.
Since its founding in February 2000 until the end of September, Orbitz said its losses, excluding one-time charges, have totaled $169.3 million.
Orbitz said other risks included potential conflicts of interest with its founders and a simmering contract dispute with Worldspan, a provider of airfare distribution technology.
Orbitz threatened to terminate its contract with Worldspan last month, saying the company had not lived up to specified levels of service--a claim refuted by Worldspan.
In its SEC filing on Wednesday, Orbitz said there is a risk that Worldspan might sue for damages resulting from bad publicity and that this could have a "material adverse effect" on Orbitz' finances.
A Worldspan spokeswoman reached Wednesday said the company did not immediately have any comment.