Redline Performance Products, the company behind Redline Snowmobiles, has closed its initial public offering of common stock. It sold 2,222,224 shares of common stock at $4.50 and received gross proceeds of $10,000,008.
The company said it plans to use the money to begin production of its 800 Revolt snowmobile. The Vista, Calif., company is listed on the American Stock Exchange under the symbol RED.
The stock opened at $4.50 on May 16, reached a high of $4.80, but closed where it began at $4.50. A total of 500,200 shares traded hands on the first day. Redline closed at $4.65 on May 21
When Redline officials unveiled their plans for their new snowmobile in 1999, they were optimistic about getting it out to consumers as quickly as possible. They signed several dealers to help sell the machines, they hit several snowmobile trade shows and said the sleds would be available for the 2001 model year.
However, the fledging company ran into financial difficulties that delayed production. Early in 2002, Redline officials tried to line up additional financing, and said the company planned to build 40 machines to send to their dealers for display purposes. More financing issues delayed that plan. As of Dec. 31, 2002, the company had a $9 million deficit.
However, about a year ago, company officials began the steps toward an initial public offering (IPO) to raise money. They filed paperwork last May and started the process rolling. Now, with the company’s initial public offering, getting sleds to dealerships and in consumers’ hands is coming close to a reality.
Even with the difficulty raising money, the company has been testing prototype machines. With the $10 million Redline expects to earn from its IPO, the firm plan to gear up production and start delivering sleds to dealers. The first sled it plans to release is the 800 Revolt powered by an 800cc two-stroke engine. The initial plans are to build 600 to 800 machines, which will be available this fall. The sleds, though, come with a higher-than-normal price tag. The 800 Revolt is priced at $12,000.
If the 800 Revolt is successful, the company has plans to build two more models, an 800 Mountain Revolt and the Revolution. Both would then be available for the 2004-2005 season. The Revolution will be the company’s foray into the four-stroke sector of the snowmobile market.
Company officials could not comment, citing a 45-day “quiet period” following the IPO, but at least three machines have been shipped to dealers for display purposes.
“It’s arrived,” said Gary Golden of Micro-Belmont Inc., Grand Rapids, Mich. “The unit is everything they said it was going to be.”
Golden said he spent about two weeks getting his showroom ready to display the Redline he received. He said he received the sled in mid-May and there has been interest in it. “There really is some excitement,” he said.
Redline also plans to build at least three additional snowmobiles in the future, including the 1300 Revolt, SX802 Rebellion and SP604 Patriot. The 1300 Revolt will be outfitted with a 1294cc three-cylinder two-stroke powerplant, the SX802 Rebellion will be a snocross only snowmobile, and the SP604 Patriot will have a four-stroke engine that pumps out about 60 HP.
In addition to snowmobiles, Redline has hinted at, and it is printed in its prospectus, that it also wants to design and build ATVs.
Copyright 2003 Powersports Business