Revised Filing for Fender IPO

Fender Musical Instruments is looking to raise as much as $160.5 million on its initial public offering by selling 10.7 million shares at a price of $13 to $15, after setting deal terms in a revised regulatory filing on July 9. JP Morgan and William Blair have to set timing, though the firms are planning a formal launch to marketing later this week, according to sources at the firms.

Fender expects to launch an IPO that values the company at roughly $395 million. The targeted valuation is about 20 times the company’s net income in 2011.

Fender has warned that sales are in decline. In the August quarter, the company is guiding toward sales of $166 million-$168 million and net income of $3.0 million-$3.4 million. That compares to $167.7 million and EPS of $3.4 million in the year-ago quarter ending July 2011.

The company is using proceeds from the IPO to repay a portion of a $239 milllion term loan used to finance the recent Kaman acquisition, reducing leverage from 4.8-times Ebitda to about 3.2.

Western Presidio, Fender’s largest shareholder, will sell 3.5 million shares in the IPO, reducing its ownership stake from 43 percent to 17.7 percent.