Express, Roadrunner fall in debut; TeleNav rises

NEW YORK Thu May 13, 2010 7:08pm EDT

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NEW YORK (Reuters) - Express Parent LLC (EXPR.N), a U.S. clothing company, and Roadrunner Transportation Systems Inc (RRTS.N) fell in their market debuts on Thursday, as investors struggled to value new companies in an uncertain market.

The shares of a much smaller navigation technology company rose.

"This is a cleansing process for the IPO market," said IPOfinancial.com President David Menlow.

He said investor fears over uncertain market conditions are being amplified by companies of variable quality that perform differently in the aftermarket.

"It just continues to feed the paranoia and fear that exists that deals just can't get done," he said.

The IPO market has been in turmoil since last week's unexpected sell-off in U.S. stocks. A number of IPOs were shelved and some analysts wondered whether the market might shut.

The shares of Express, which says it is the No. 6 specialty retailer in the United States and had 573 stores selling clothing aimed primarily at women in their 20s as of January 30, opened flat with their IPO price and traded down.

The shares opened at $17 and dipped as low as $16.50 before recovering slightly to close down 1.5 percent at $16.75 on the New York Stock Exchange. The Columbus, Ohio-based company sold 16 million shares for $17 each on Wednesday, raising about $272 million. It had planned to sell shares for between $18 and $20 each.

Shares of Roadrunner, a transportation logistics company, opened 1.8 percent below their IPO price at $13.75. The shares fell as low as $13.60 before closing at $13.75, matching their opening price. The company sold 10.6 million shares for $14 each on Wednesday, raising about $148.41 million. It had planned to sell shares for between $14 and $16.

Roadrunner provides logistical support for truck, intermodal and air transport primarily in North America, but also provides international air freight logistics. Its services include pricing, contract management and tracking.

Private equity firm Golden Gate Capital bought 75 percent of Express in 2007 when its parent company, Limited Brands Inc LTD.N, sought to exit the volatile apparel industry.

Golden Gate planned to sell a portion of its shares in the offering, but expected to retain a greater than 50 percent stake in the company, according to the most recent prospectus.

Express net sales fell 0.9 percent to $1.72 billion in the year ended January 30. The company swung to a $75.31 million profit from a $29.04 million loss. Comparable store sales -- outlets open at least a year -- slipped 6 percent compared with a 3 percent dip a year earlier.

Express said it would use the proceeds from the offering to pay off loans, interest, and fees and expenses associated with the IPO.

Roadrunner is backed by funds affiliated with private equity firms Thayer Hidden Creek, Eos Partners and American Capital. The company's revenue fell 16.1 percent to $450.35 million in 2009. Its net loss attributable to common stockholders narrowed by 53.5 percent to $1.78 million.

Roadrunner said it would use proceeds from the offering to pay off debt, loans and interest.

The shares of navigation technology company TeleNav Inc (TNAV.O) rose 22.5 percent to close at $9.80 after the company priced them below an already lowered range. Earlier on Thursday, TeleNav sold 7 million shares for $8, raising about $56 million. It had cut the price range to $9 to $10 per share from $11 to $13.

TeleNav sells voice-guided mobile navigation services and has business arrangements with companies, including Sprint Nextel Corp (S.N) and AT&T Inc (T.N).

The underwriters for the Express IPO were led by Bank of America Merrill Lynch and Goldman Sachs & Co. The underwriters for the Roadrunner IPO were Robert W. Baird & Co, BB&T Capital Markets and Stifel Nicolaus. TeleNav's underwriters were led by JPMorgan and Deutsche Bank.

(Reporting by Clare Baldwin; editing by Leslie Gevirtz, Richard Chang and Andre Grenon)

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