DETROIT - Some minority auto suppliers say they are more likely to consider a public offering in the wake of a new Big 3-U.S. government rule redefining minority ownership.
The rule allows a publicly held company to retain minority-business status with the automakers when as little as 10 percent of its stock is held by a minority individual. The requirement was 51 percent previously.
'It does gives us another option. It's definitely a positive thing for minority business owners,' said Dave Bing, president and owner of the Bing Group, a Detroit-based supplier of stamping, assembly and steel to the auto industry. Its annual sales are about $180 million. 'I do want to look at it,' Bing said. 'But I also want to take some care to weigh a lot of things.'
Under the rule, the minority business owner also must have controlling interest in the company, meaning his or her ownership stake must be the largest. The owner also must control the company's day-to-day operations and board of directors. The rule is restricted to companies that sell to the automakers.
'Certainly this new rule has put the option of going public further toward the top of our agenda,' said Jon Barfield, president and CEO of the Bartech Group, a temporary-staffing company in Livonia, Mich., that projects 1998 sales near $100 million.
'Public ownership may or may not be for us, but it certainly is good to have that option,' said Barfield. 'Going public does offer us less expensive financing for the major expansion, size and scope that are needed in the auto industry.'
John James, owner of O.J. Transport Co. of Detroit, said an initial public offering also is more likely for his $43-million-a-year trucking company.
'I'm absolutely more interested in an IPO now,' he said. 'I don't have specific plans yet, but it's certainly on my mind now.'
The rule is part of a three-year pilot program that expires February 2001, meaning that minority companies interested in going public likely would want to do so before then.
The rule was part of an unpublicized memorandum of understanding among General Motors, Ford Motor Co., Chrysler Corp. and the U.S. Small Business Administration.