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Sunday, 18 May 2014 21:30

Nunica-based e-cigarette company files for $150M public stock offering, plans to list on Nasdaq

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West Michigan e-cigarette company Victory Electronic Cigarette Co. has filed a registration statement with the Securities and Exchange Commission to raise up to $149.5 million in a follow-on offering of its publicly traded shares.

The Nunica-based distributor of electronic cigarettes also said it intends to list its stock on the Nasdaq Global Market under the symbol ECIG, according to the Form S-1 filing last week. The company’s shares, which currently trade on the Over the Counter market, closed Friday at $6.12 per share, giving the company a market capitalization of more than $430 million.

Victory’s battery-powered products simulate the cigarette smoking experience by allowing users to inhale nicotine vapor without a flame or ash. Electronic cigarettes represent a fast-growing segment of the $756 billion worldwide tobacco market, with about 250 e-cigarette brands targeting the 1.3 billion existing smokers with what’s being touted as a less harmful smoking alternative.

Founded in April 2012, Victory is attempting a consolidation play in the highly fragmented e-cigarette niche, which generated about $3.5 billion in sales globally in 2013 and grew 180 percent last year in the United States alone, according to Euromonitor statistics cited in the filing.

The company has made a string of acquisitions in the first four months of 2014 and completed several rounds of financing, including a recent $22 million private placement to accredited investors lead by Chicago-based Millenium Park Capital Management. The public stock offering would help Victory pay down debt, expand its market presence and finance additional acquisitions, according to the filing.

“We have a number of acquisitions in our pipeline,” Victory CEO Brent David Willis told financial publication The Deal a month ago. “We’re tracking around one a month. We are not at all finished. We have well north of $100 million of new acquisitions in the near future.”

The company has completed three acquisitions this year, including U.K.-based Vapestick Holdings Limited in January, Atlanta-based FIN Electronic Cigarette Corporation Inc. in February and U.K.-based Must Have Limited in April. The M&A strategy has helped propel growth for Victory, which reported a net loss of $20.7 million in 2013 on revenues of just $3.1 million. On a pro forma basis (to account for the acquisitions), the company said it would have generated revenues of $75.5 million and posted a loss of $84.4 million, including $67 million in acquisition-related adjustments.

Victory, which went public via a reverse merger in June 2013, also voted last month to change its name to Electronic Cigarettes International Group Ltd. The company expects the name change to take effect on May 19.

Victory’s corporate headquarters is based in a 2,500-square-foot facility at 11335 Apple Drive in Nunica, where it’s led by Willis, who had served as COO from June 2012 to June 2013. Willis previously was chairman and CEO of Liberty Ammunition and Vascular Technologies Inc. and served as CEO of beverage company Cott Corp. (NYSE: COT). Before that, he was a senior executive at Anheuser-Busch InBev SA/NV (NYSE: BUD) AmBev (NYSE: ABV) and held various positions at Coca-Cola Co. and Kraft Foods Inc.

Other key members of the company’s executive team include: CFO and Treasurer James P. McCormick, a former management consultant who was CFO at Sodexo Inc. and Federal Flange Inc. and served in various positions with British American Tobacco; co-founder and Chief Creative Innovation Officer Marc Hardgrove, who previously helped launch the web hosting company Jumpline Inc. and the search engine optimization firm Next Net Media LLC; and President of International Michael Clapper, the co-founder and former executive chairman of Vapestick Holdings Limited that Victory acquired earlier this year and who was also the founder of the private equity firm Clapper Ventures LLP and of mortgage and loan distributor Enterprise Group, both based in the U.K.

The offering is being underwritten by Charlotte, N.C.-based Wells Fargo Securities LLC and Toronto-based Canaccord Genuity Inc. New York-based law firms Robinson Brog Leinwand Greene Genovese & Gluck PC and Simpson Thacher & Bartlett LLP are providing legal counsel on the offering.

The complete S-1 filing can be found here.

Read 7659 times Last modified on Sunday, 18 May 2014 15:06

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