Fender Guitars To Go Public

Friday, March 9th, 2012

New York — The Associated Press

Fender Musical Instruments Corp. have announced it has filed papers Thursday for a $200-million (U.S.) initial public offering.

Founded in 1946 by Leo Fender, the company created the Telecaster and Stratocaster guitars in the 1950s.

“The Fender brand in particular is closely associated with the birth of rock `n roll and has a strong legacy in music and in popular culture,” the company said in a filing with the Securities and Exchange Commission.

Launching the IPO will help the company pay down its debt load of $246.2-million. Fender said it plans to use about $100-million of the IPO’s proceeds to repay debt, with money left over for working capital.

With sales in 85 countries, Fender said revenue could get a boost from growing interest in guitar-based music from emerging markets like China, India, and Indonesia. But it warned that increasing popularity of other types of music, such as rap or house, could hurt demand for its guitars.

Guitars and amps make up nearly three-quarters of its sales.

The company plans to trade the shares under the “FNDR” symbol on the Nasdaq, but didn’t say how many shares the company and its shareholders intend to sell or set a price target on its stock. It also didn’t say when it plans to go public.

With the overall stock market now trending up, the conditions for an IPO are improving and investors are looking upon the offerings more favourably. In recent weeks, several companies, mostly in the technology and Internet sector, have made splashes in their Wall Street debuts. Fender said its profit increased to $19-million in fiscal 2011 from a loss of $1.7-million in fiscal 2010.

JPMorgan and William Blair are managing the IPO.