Rubicon Hints At ArborGen IPO, Laments Skidding Share Price

December 5, 2014

By Riley McDermid, BioSpace.com Breaking News Editor

Kiwi forestry biotech company Rubicon is attempting to rev up support for an initial public offering for its ArborGen investment, of which it owns a third, even as it defended its own struggling share price, which has fallen around 68 percent in the last three years.

The company attempted to take ArborGen public in 2011 but could not find enough investors to fund the offering. It has been talking about a second run since August 2013, but appears to be waffling on when or how that IPO may happen.

"To be clear, it is not a question of whether ArborGen can be IPO'd - unquestionably it can be," chairman Hugh Fletcher told shareholders at Rubicon’s annual meeting in Wellington, New Zealand, this week. That comment pushed Rubicon shares up 9.1 per cent to 36 cents in Friday trading.

"Rather it is a matter of choosing the optimal mix of equity market conditions and business progress to execute an IPO of the company,” he said, “to set an appropriate initial value of the company, at minimum dilution to existing shareholders, and to raise sufficient capital to secure its future growth."

Rubicon has had some white knight interest over the last year—in February, hedge fund Libra Advisors took a $12 million stake in Rubicon, an investment which the company has attempted to use to honor its funding commitments to ArborGen and refill its coffers as it attempts a run at an IPO.

Fletcher also said that it was disappointed that recent gains in the share price of its Tenon wood molding business had not also lifted Rubicon’s overall share price. Shares of Tenon have climbed more than 200 percent since 2012, but Rubicon has stayed stubbornly depressed.

"Our view is that the current Rubicon share price is a very poor reflection of the long-term value of these underlying investments," he said. "The share price is simply not recognizing the progress being made."