Natrol plans to offer 3.9M shares in $38M IPO

Rob Eder

CHATS WORTH, Calif. — Earlier this month, Natrol filed a registration statement with the Securities and Exchange Commission for an initial public offering of some 3.9 million shares of the company’s common stock.

According to the company’s SEC filing, the proceeds-estimated at some $37.7 million based on an anticipated initial offering price of $12 to $14 per share, and factoring in certain costs associated with the underwriting-would be used in a variety of ways.

Nearly $12 million will be earmarked for repaying the company’s existing debt. Natrol accumulated some $11 million in debt last February in connection with its acquisition of the Quintessence and Highgar Farms garlic supplement brands from Basic Vegetable Products Inc. Some $6 million would be used to redeem outstanding shares of Natrol’s redeemable preferred stock. Another $1 million would go to meet additional capital expenditures related to upgrading the company’s manufacturing facilities. The remaining balance of approximately $19 million would go into the company’s war chest as potential working capital.

The shares are to be offered by Adams, Harkness & Hill, NationsBanc Montgomery Securities LLC and Piper Jaffray Inc.

Measuring the company’s growth over the past several years, Natrol recorded net sales of $9.5 million in 1993. Last year, the company generated about $43 million.

And, indeed, 1998 has proven to be a busy year. Aside from its mid-winter acquisitions, Natrol has continued to launch new products of its own at a break-neck speed, including the My Favorite Multiple line of vitamin/mineral/supplement formulations and several naturally based weight loss products and diet aids.

In addition, it appears as if the seeds of one late 1996 herbal launch by Natrol, namely Kavatrol, are about to bear fruit, as the kava market, which last year netted nearly $3 million in sales, according to Information Resources Inc. data published by the Wall Street Journal, should soon be ripe for the picking. The Journal article went on to refer to kava as being “poised to become the next blockbuster herbal remedy.”

Judging from the success of last year’s St. John’s Wort entries-which together generated about $48 million at retail last year-kava sales should, indeed, improve dramatically in 1998, especially if manufacturers such as Natrol are able to deliver to the consumer public the message that kava is effective in easing day-to-day stress.

For Natrol, that will mean apprising the public of the rather favorable results of the random, double-blind, placebo-controlled study on the effectiveness and safety of Kavatrol, which the company funded doctors at the Medical College of Virginia at Virginia Commonwealth University to conduct on its behalf. The study, which tested 60 adults between the ages of 18 and 60, showed that Kavatrol significantly reduced daily stress and non-clinical levels of anxiety in the group that was administered the supplement over the course of the four-week study.

Indeed, Natrol has invested big bucks toward taking its message-as well as the company itself- public. The company has planned a full schedule of Natrol Health Minute spots to air throughout the year on the nationally syndicated Rush Limbaugh and Dr. Laura Schlessinger radio programs. In addition, a full complement of television commercials has also been planned, as well as a print campaign.

COPYRIGHT 1998 Reproduced with permission of the copyright holder. Further reproduction or distribution is prohibited without permission.

COPYRIGHT 2004 Gale Group

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