IPO Preview: ClubCorp Holdings

Sep.19.13 | About: ClubCorp Holdings, (MYCC)

Based in Dallas, TX, ClubCorp Holdings (NYSE:MYCC) scheduled a $306 million IPO with a market capitalization of $1.046 billion at a price range mid-point of $17, for Friday, September 20, 2013.

Nine IPOs are scheduled for this week, 11 for next week. The full IPO calendar can be found at IPOpremium.

S-1 filed September 9, 2013.

Manager, Joint Managers: Goldman; Jefferies; Citigroup; BofA Merrill Lynch
Co-Managers: Wells Fargo / Stephens

Summary
Founded in 1957, MYCC is a membership-based leisure business and a leading owner-operator of private golf, country, business, sports and alumni clubs in North America.

Valuation

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

Proforma for 6/12/13 24 wks

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

ClubCorp Holdings

$1,046

1.5

153.8

4.2

-26.2

29%

Click to enlarge

Top line revenue is growing 4-5% per year. Operating income is in the 8% range, and the primary path to profitability seems to be to retire debt that has a 10% coupon.

Glossary

Conclusion
Internal growth appears limited, and MYCC has probably cherry-picked the best acquisition prospects in the US. The proposed market capitalization of $1 billion seems high based on the P/E multiple and the price-to-tangible book value, although the underlying real estate might provide an asset cushion. The rating is neutral to negative at the price range mid-point.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above:

Business
Founded in 1957, MYCC is a membership-based leisure business and a leading owner-operator of private golf, country, business, sports and alumni clubs in North America.

The portfolio of 151 owned or operated clubs, with over 145,000 memberships, serves over 350,000 individual members.

MYCC is the largest owner of private golf and country clubs in the United States and owns the underlying real estate for 80 of 102 golf and country clubs (consisting of over 18,000 acres of fee simple real estate).

Facilities are located in 23 states, the District of Columbia and two foreign countries.

Private equity owned
KSL owns 100% of MYCC pre-IPO
here

Dividend policy
MYCCC expects to pay a quarterly cash dividend of $0.12 per share, or $0.48 per annum, starting in the first calendar quarter of 2014. At a price range mid-point of $17, $.48 per year is a 2.8% yield.

Use of Proceeds
MYCC intends on selling 10.9 million shares. A selling stockholder intends to sell 7.1 million shares.

MYCC expects to net $169 million from sale of 10.9 million shares. $145 million is allocated for debt repayment, $15 million is allocated to redemption premium, and $5 million is to pay a one-time termination fee to an affiliate of KSL.

Disclaimer: This MYCC IPO report is based on a reading and analysis of MYCC's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.