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January 25, 2018 01:00 AM

Gates IPO begins trading on New York Stock Exchange

Kyle Brown
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    DENVER—Gates Industrial Corp. P.L.C. offered 38.5 million ordinary shares at a price of $19 per share, valuing its initial public offering at $731.5 million.

    Ordinary shares began trading on the New York Stock Exchange under the symbol GTES on Jan. 25. More than 14 million shares had been traded before noon that day. The stock climbed to $19.41 per share, but hovered at about the $19 mark for most of the morning. As of 11:47 a.m., the stock dipped below the $19 mark for the first time, falling to $18.55.

    The offering is expected to close Jan. 29, subject to customary closing conditions.

    Gates had granted underwriters a 30-day option to purchase up to an additional 5.77 million ordinary shares, according to a company release.

    The net proceeds from the offering will be used to redeem $283.1 million of its 5.75 percent senior notes and an additional number of its 6 percent senior notes, both due in 2022. The remainder, if any exists, can be used to repay other outstanding indebtedness. The stock will be used to pay down debt incurred when funds affiliated with Blackstone acquired Gates in July 2014 for $5.4 billion in a leveraged buyout.

    The company's Form S-1 registration filing of Dec. 27 lists Gates' current total indebtedness at about $3.92 billion. There are no current plans to pay dividends on ordinary shares. Gates' current owner, Blackstone Group L.P., will retain a majority of the voting power.

    Formerly known as Gates Corp., the Denver-based company organized the new Gates Industrial Corp. P.L.C. entity in September under the laws of England and Wales, according to the filing.

    The IPO is underwritten by multiple financial institutions, led by Citigroup, Morgan Stanley and UBS Investment Bank.

    Based on the size of the business and its track record, Kathleen Smith, principal and manager of IPO exchange-traded funds for Renaissance Capital, had said the IPO could be worth about $500 million, in a previous interview.

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