Ernst Stock Rises In Its Debut On Market
Ernst Home Center's stock was priced at $16 but was trading higher today as the shares debuted in the over-the-counter market.
The stock opened at $18.25. It gave up some of those gains, trading as low as $16.75, but was at $17 in late trading. Its symbol is ERNS.
Ernst announced its initial public offering in early June, but
withdrew plans to begin trading two months later without explanation.
The company expected to raise about $50 million from its issuance of 2.9 million shares plus 435,000 shares set aside to meet overallotments. Ernst said it would use the proceeds to open about 50 new superstores and close seven to 10 older stores. About 74 percent of the common stock of the company will be owned by EHC Companies Inc., Ernst's parent company.
Ernst is a home improvement, hardware and garden retailer. The company currently operates 77 stores in Washington, Oregon, Idaho, Utah, Nevada, Montana, Wyoming and Colorado.
Ernst withdrew its initial offering apparently in response to Wall Street's generally chilly reception for new issues in the summer.
Retail analysts also speculated that the issue may have been withdrawn because investors were discouraged by the strong performance of Ernst's competitors - Atlanta-based Home Depot and Seattle-based Eagle Hardware & Garden.
Although Ernst has been very profitable in recent years, according to filings with the Securities and Exchange Commission, its parent company, EHC, has been short of cash and unable to pay a consortium of banks the interest on a loan of about $150 million.
Since October 1989, about $83 million in payments have been made by EHC's owner, MBL Life Assurance Corp. of Newark, N.J.
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