Copenhagen listing this month

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It took just a year for British investment company Doughty Hanson to make the decision to float LM Glasfiber of Denmark -- the largest maker of rotor blades for wind turbines -- on the Copenhagen stock exchange. Doughty Hanson took over LM in March 2001 and last month announced a flotation for May 3, to follow a book-building period from April 25. Since 1978 LM has produced 60,000 blades and today operates from 11 factories in five countries.

The Initial Public Offering is for 24,550 million shares: 24,369,825 new and 180,175 existing shares. The indicative share price is DKK 70-82 (EUR 9.42-11.03) and the flotation is expected to realise between EUR 231 million and EUR 271 million. Da

nish market analysts, however, are saying the indicative price is too high in view of the size of the company's debt, EUR 455.8 million.

There are a number of reasons for the uncertainty about the value of LM stocks. First, there is concern that the start of blade production by several of LM's largest customers, NEG Micon, Bonus and Nordex, could impact the blade company's growth. Second, the majority shareholder holds 51.6% of the company (or 45% if it exercises an option to sell existing shares).

Third, LM, which had a turnover of EUR 358 million in 2001, a 38% improvement on the year before, is projecting an increase in turnover of 10% for 2002 and profit before tax of 18-20%. The profit margin is more than twice that of its customers -- wind turbine manufacturers -- who may choose to put further pressure on LM's prices. LM, too, warns of its dependence on just a few large companies in its prospectus.

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