https://www.wsj.com/articles/veg-o-matic-maker-files-to-go-public-but-wait-theres-more-1491211805
Ronco Brands Inc., a gadget maker best known for its late-night commercials peddling the Veg-O-Matic and the Pocket Fisherman, has a new product to sell: its own stock.
The Austin, Texas, company, which has passed through several owners since its founder Ron Popeil turned the infomercial into a kitschy art form, last week began selling an initial public offering that seeks to raise $30 million and values the business at more than $110 million.
Act now, by buying more than $1,000 in shares, and you’ll get a one-time discount of 20% on Ronco.com purchases, the company says on its website. Pony up more than $5,000, and Ronco will kick in one of the countertop rotisserie ovens that account for more than half its revenue.
“We have millions of satisfied customers out there,” said William Moore, Ronco’s president since 2011. “We are asking them to join us with another vote of confidence in the future of Ronco Brands.”
It could turn out to be an expensive way to roast a chicken. While Ronco says it has sold more than $2 billion of housewares and gadgets since the early 1960s, it is now a small and unprofitable business. Ronco generated revenue of $9 million in 2015, according to securities filings, and just $3.6 million in the first half of 2016, when Ronco had a net loss of $2.7 million.
Ronco has an accumulated deficit of $32.2 million, according to the filings, and roughly $17 million in debt, with interest rates as high as 20%. Auditors have “raised substantial doubt” about whether Ronco can keep operating, according to the filings, which also highlighted concerns about the 22-person company’s financial reporting.
Mr. Moore, who would control 97% of the voting rights after the sale, said the company’s investment bankers have deemed its valuation appropriate given expectations for 2017 and 2018. The auditor warnings are “pretty standard stuff,” he said, “in an environment where you are losing money.”
Mr. Popeil, who founded Ronco more than 50 years ago, became famous for pitching products like the Beef Jerky Machine—a dehydrator billed as “a one-way ticket to meat-lover’s heaven”—and the $19.99, slicing, dicing Veg-O-Matic. Mr. Popeil took the company public in 1969 and bought it back out of bankruptcy protection in the mid-1980s.
By the time he sold the business in 2005 for nearly $60 million, Ronco was generating $150 million in sales just from infomercials, Mr. Moore said.
With a lack of successful new products and other financial troubles, Ronco filed for chapter 11 bankruptcy protection again in 2007. The company changed hands twice more before being purchased in 2011 by its current owners in exchange for assuming roughly $13 million in debt. Some of that debt would be paid down by the proceeds from the offering.
The company is bypassing the Wall Street firms that normally peddle new offerings, instead encouraging investors through its website to reserve shares with a minimum $120 investment. Ronco is offering its shares under Reg A+, a little-used provision of the Jumpstart Our Business Startups Act of 2012, which allows small companies to sell as much as $50 million of securities with fewer legal and reporting requirements.
Ronco has six months to complete the offering, which could be extended by an additional six months by the company’s board.
Online sales of products such as the EZ-Store Rotisserie and the Turbo Food Dehydrator now account for about 70% of Ronco’s revenue. Its infomercials serve mostly to keep the brand in front of consumers and make it easier for the company to gain shelf space at major retailers.
“Today, things are totally different,” said the 81-year-old Mr. Popeil, who lives in Beverly Hills, Calif. “Now, you need TV time, but not an infomercial—maybe two minutes. You have to have retail stores and now you have to have social media.”
Ever the inventor, Mr. Popeil said he has spent the last 14 years perfecting an indoor, electric turkey-fryer that can cook a 16-pound bird in less than an hour. Mr. Popeil, who still talks to management, said he would like to sell the patent to Ronco and had been hoping to present his invention to the company’s investment bankers.
“It’s great for Thanksgiving, and don’t forget Christmas,” he said.
Mr. Moore said Ronco is eager to have a look.
“Ron Popeil is one of the most creative inventors that has ever walked the planet,” Mr. Moore said. “Any product that he likes, the consumer is likely to embrace.”
Ronco Brands Inc., a gadget maker best known for its late-night commercials peddling the Veg-O-Matic and the Pocket Fisherman, has a new product to sell: its own stock.
The Austin, Texas, company, which has passed through several owners since its founder Ron Popeil turned the infomercial into a kitschy art form, last week began selling an initial public offering that seeks to raise $30 million and values the business at more than $110 million.
Act now, by buying more than $1,000 in shares, and you’ll get a one-time discount of 20% on Ronco.com purchases, the company says on its website. Pony up more than $5,000, and Ronco will kick in one of the countertop rotisserie ovens that account for more than half its revenue.
“We have millions of satisfied customers out there,” said William Moore, Ronco’s president since 2011. “We are asking them to join us with another vote of confidence in the future of Ronco Brands.”
It could turn out to be an expensive way to roast a chicken. While Ronco says it has sold more than $2 billion of housewares and gadgets since the early 1960s, it is now a small and unprofitable business. Ronco generated revenue of $9 million in 2015, according to securities filings, and just $3.6 million in the first half of 2016, when Ronco had a net loss of $2.7 million.
Ronco has an accumulated deficit of $32.2 million, according to the filings, and roughly $17 million in debt, with interest rates as high as 20%. Auditors have “raised substantial doubt” about whether Ronco can keep operating, according to the filings, which also highlighted concerns about the 22-person company’s financial reporting.
Mr. Moore, who would control 97% of the voting rights after the sale, said the company’s investment bankers have deemed its valuation appropriate given expectations for 2017 and 2018. The auditor warnings are “pretty standard stuff,” he said, “in an environment where you are losing money.”
Mr. Popeil, who founded Ronco more than 50 years ago, became famous for pitching products like the Beef Jerky Machine—a dehydrator billed as “a one-way ticket to meat-lover’s heaven”—and the $19.99, slicing, dicing Veg-O-Matic. Mr. Popeil took the company public in 1969 and bought it back out of bankruptcy protection in the mid-1980s.
By the time he sold the business in 2005 for nearly $60 million, Ronco was generating $150 million in sales just from infomercials, Mr. Moore said.
With a lack of successful new products and other financial troubles, Ronco filed for chapter 11 bankruptcy protection again in 2007. The company changed hands twice more before being purchased in 2011 by its current owners in exchange for assuming roughly $13 million in debt. Some of that debt would be paid down by the proceeds from the offering.
The company is bypassing the Wall Street firms that normally peddle new offerings, instead encouraging investors through its website to reserve shares with a minimum $120 investment. Ronco is offering its shares under Reg A+, a little-used provision of the Jumpstart Our Business Startups Act of 2012, which allows small companies to sell as much as $50 million of securities with fewer legal and reporting requirements.
Ronco has six months to complete the offering, which could be extended by an additional six months by the company’s board.
Online sales of products such as the EZ-Store Rotisserie and the Turbo Food Dehydrator now account for about 70% of Ronco’s revenue. Its infomercials serve mostly to keep the brand in front of consumers and make it easier for the company to gain shelf space at major retailers.
“Today, things are totally different,” said the 81-year-old Mr. Popeil, who lives in Beverly Hills, Calif. “Now, you need TV time, but not an infomercial—maybe two minutes. You have to have retail stores and now you have to have social media.”
Ever the inventor, Mr. Popeil said he has spent the last 14 years perfecting an indoor, electric turkey-fryer that can cook a 16-pound bird in less than an hour. Mr. Popeil, who still talks to management, said he would like to sell the patent to Ronco and had been hoping to present his invention to the company’s investment bankers.
“It’s great for Thanksgiving, and don’t forget Christmas,” he said.
Mr. Moore said Ronco is eager to have a look.
“Ron Popeil is one of the most creative inventors that has ever walked the planet,” Mr. Moore said. “Any product that he likes, the consumer is likely to embrace.”
