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Kamehameha
may raise $1 billion
in Goldman sale
About 11 million Goldman Sachs
Staff and wire reports
shares held by Kamehameha
Schools are part of a pending
sale this summerKamehameha Schools stands to receive about $1 billion from a pending sale of Goldman Sachs Group Inc. shares.
Goldman Sachs said 11 million of Kamehameha's shares in the company are included in a pending offer of 40 million shares, which also includes stock owned by current and retired partners, and an investment arm of Japan's Sumitomo Bank.
Goldman shares closed at $93.19 today on the New York Stock Exchange. If the pending sale were to take place at that price, Kamehameha would receive $1.03 billion. However, no date has been set for the sale so the price the shares might go for is not yet known. Bloomberg News said the sale is planned for late July or early August.
The trust already got back almost all of its 1992 investment of $500 million in the Wall Street investment banking firm from the company's initial public offering in May 1999. But the estate still owns about 22 million shares, nearly 5 percent of the company, and now hopes to sell half of them.
In the initial offering last year, Kamehameha Schools received about $477 million by selling 9 million Goldman shares, which represented nearly one-third of the estate's holding in the company at the time. The initial public offering last year sold at $53 a share.
The trust's shares in Goldman are held by a nonprofit branch called Kamehameha Activities Association.
Estate officials could not be reached for comment this morning.
The upcoming sale of 40 million shares will consist of Kamehameha's 11 million, Sumitomo's 12.6 million, 12.4 million from current partners and 4 million from retired partners.
Goldman Sachs shares were down $2.75 at the end of trading today, after falling as much as $7.56 to a low for the day of $88.371/2. The announcement of the sale was made late yesterday after the markets were closed.
"This will depress the stock because of the immediate supply and demand imbalance," said Scott Murray, an analyst at Banc One Investment Advisors in Columbus, Ohio, which has about $56 billion in equity investments.
Goldman is selling stock in part to boost its "float", or the number of shares in the public's hands. About 17 percent of shares outstanding are in the public's hands, compared with more than 80 percent at Goldman rivals Merrill Lynch & Co. and Morgan Stanley Dean Witter & Co.
Goldman's sale will increase by 50 percent the amount of stock that's public. Following the issue, scheduled for late July or early August, the public float will be "in the mid-20 percent range," according to a Morgan Stanley report by analyst Henry McVey.
Goldman is also accelerating the pace of insiders' sales to minimize the impact on its stock down the road. Stock held by employees, retired, current and limited partners will become available for sale over the next four years, as lock-up periods expire.
That could put more than 300 million shares on the market, nearly four times the company's current public float. The largest surge would come in May 2002 as 85 million shares held by partners, about a third of the total, come up for sale.
Goldman wants to bring shares to the market in an offering that will increase the number of shares in public hands now to minimize the impact in 2002 when more partners' shares become available.
Current partners were originally "locked-up" until 2002, when a third became available for sale. The remaining two thirds were scheduled to free up in the following two years. The five-year lock-up was self-imposed _ not required by law.
Now, all current partners will have the opportunity to apply to sell some of their holdings, said the person familiar with the sale.
Star-Bulletin reporter Russ Lynch and
Bloomberg News contributed to this report.
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