Rural Cellular Corp. hopes to raise about $30 million in an initial public offering of common stock that could occur as early as this month. The IPO would make the company one of the few rural wireless telecommunications companies to have gone public.
Based in Alexandria, Minn., Rural Cellular is the state’s third largest provider in number of customers. Owned by 40 independent telephone companies, it provides cellular service to 25,000 customers through its Cellular 2000 network. Keypage, its paging provider, has 3,000 customers. The company’s phone service covers a growth area of 34 counties, or roughly half of Minnesota.
Rural Cellular also has a strategic partnership with
U S West Inc. to garner roaming revenues from Minneapolis-St. Paul residents who visit resorts and casinos north of the Twin Cities. Roaming revenues, which cost more and afford greater profit margins for providers, accounted for nearly one quarter of all Rural Cellular’s revenues during the first three quarters of 1995.
The “red herring,” or preliminary offering statement, for the public offering is to be released this week. Because of Securities and Exchange Commission restrictions during the securities registration period, officials at Rural Cellular and at the deal’s underwriter, Dain Bosworth of Minneapolis, would not comment on the offering.
The 3.08 million shares of Class A common stock are to be sold at a price expected to be set between $9 and $11 per share. The offering will include 2.5 million shares sold by the company and 580,000 shares to be sold by existing shareholders. An additional 3.8 million shares already outstanding are currently held by various parties, including the 40 owners of Rural Cellular.
Rural Cellular was founded in 1991 on the premise that a consortium of many smaller phone companies could leverage their resources. Since 1991, the company has invested more than $33 million in cellular towers, land and buildings, data processing systems and other equipment. Rural Cellular’s growth spurt began three years ago when it took over management of its system from Pacific Telecom. It began to make a profit in fourth quarter of 1994.
For the first nine months of 1995, Rural Cellular had revenues of $14.9 million, compared with revenues of $11.2 million during the same period in 1994. Profits totaled $1.2 million during the first three quarters of 1995, while the company lost $33,000 during the same period the prior year.
