Bridgewater debuts on TSX after scaling back IPO

Published in the Ottawa Business Journal newspaper and website.
Dec. 14, 2007 (Dec. 17 in the print edition)

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Ed Ogonek.
Ed Ogonek, CEO of Bridgewater Systems.
Photo by DARREN BROWN for the Ottawa Business Journal

Bridgewater Systems may have had to lower targets for its initial public offering, but CEO Ed Ogonek says the company’s successful closing of the IPO was a feat in itself in these challenging times.

The Ottawa-based company, which makes software to manage voice-over-Internet-protocol subscriber traffic, debuted on the Toronto Stock Exchange this morning after having raised $35 million in its IPO through the sale of 6.36 million shares at $5.50 each.

The stock finished its first trading day down about 5.5 per cent, or 30 cents, to $5.10.

Of the IPO amount, $20 million came from a treasury offering and $15 million from the sale of shares by existing shareholders.

“This is an opportunity to now accelerate our growth plan going forward, with investment into global infrastructure to extend our sales and marketing reach, our solution capabilities with a broader product portfolio, and extend our high-value professional services capabilities,” Mr. Ogonek said in an interview with the OBJ.

Mr. Ogonek confirmed that the amount raised in the IPO was lower than the company had initially hoped for, with a Dow Jones report late last week saying that Bridgewater had originally planned to raise $75 million and sell shares for $7.50 to $8.50 each.

However, Mr. Ogonek said the company was pleased with the results of the offering given the current volatility of the markets.

“Our ability to close a public offering in a challenging market is a testament to Bridgewater’s strength,” he said. “There have been a large number of IPOs and deals in the market which haven’t been able to close, and in fact I think we’re the only technology deal that has been successful in the back part of 2007.”

Mr. Ogonek said the higher original pricing on the company’s IPO “wasn’t achievable,” and that the company was “very pleased and excited” about its ability to close the transaction in this market.

“We knew that the market was very volatile and challenged, with the subprime mortgage issues and the performance overall of new issuances at the end of the year, and we worked aggressively within a condensed timeframe (to complete the offering),” he added, noting, “We’re at an important point in our growth plan where we see significant benefits from an infusion of capital to drive that strategic growth plan right now. It will help give us market visibility, especially as we’re looking to win additional business in Asia Pacific and Europe.”

Bridgewater, which employs roughly 160 employees in Ottawa and more than 200 across the globe, saw revenues grow by about 320 per cent to $31 million between 2002 and 2006, or by a compound annual growth rate of 43.4 per cent since fiscal 2004. The company has been profitable for the past 14 quarters.

Sales for the nine months ended Sept. 30 were US$27.4 million, up from $21.4 million in the same period a year earlier. However, profits for the same period fell year-over-year to $874,000, or four cents per diluted share, from $1.6 million, or eight cents per diluted share. The company’s cash and cash equivalents were $16.8 million as of Sept. 30.

“We’re a company that’s grown to a real strong position in the market, and… our intent as we grow our presence, influence and leadership is to grow the importance of our Ottawa headquarters,” Mr. Ogonek said. “With the $20 million, we’ll be able to build a strong base of expertise and a strong team of employees and continue to reinforce our power in the marketplace and establish a global market.”

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