Santa Barbara-based Select Staffing’s deal to go public and pay off $200 million in debt has fallen though.
With $1.5 billion in revenue in 2009, Select Staffing, a temporary employment firm, is the largest private company in the Tri-Counties. The company said Dec. 11 that it planned to join up with Florida-based Atlas Acquisition Holding Corp., a publicly traded “blank check” firm with $200 million in assets.
The deal to join the two firms would have left Select publicly traded and made significant headway in trimming the $535.5 million in debt Select racked up through a string of acquisitions in recent years. But Select said Feb. 12 that more than 30 percent of Altas’ shareholders voted against the merger.
That stopped the deal. Atlas, which was formed with the intent of pooling investors’ money and buying into an operating company, will be liquidated. Common shareholders will get their money back, but the firm’s founders stand to lose at least $5.8 million they put in for early-stage stock that will become worthless.
“We wish the outcome were different,” Select Chief Executive Officer Steve Sorensen said in a release. “Select has operated very successfully for 25 years as a private company, so for us it is back to business as usual.”
Select also announced Feb. 12 that its revenue went up $52 million in 2009, a 3.6 percent increase.
“We are now focused on capitalizing on the improving fundamentals to grow our business in 2010,” Select President Paul Sorensen said in a release.
However, Select did not say how it plans to address mounting pressure from its lenders to reduce its debt relative to its revenue.
Its creditors include Bank of the West and its parent, Bank Paribas, who in 2007 backed a $400 million leveraged recapitalization of Select and granted an optional $200 million revolving credit line for acquisitions. Steve Sorensen told the Business Times in December that Select’s creditors have pressured the firm to cut its leverage nearly in half.