Under Armour CEO to cash in


Some early investors in Under Armour Inc., including its founder and chief executive, are planning to sell $283 million in stock in their first major cashing-in since taking the Baltimore athletic-wear company public last year.

In a filing with the Securities and Exchange Commission yesterday, Under Armour reported that investors plan to offer 6.8 million shares at $36.06, with more than 1 million additional shares available if the deal's underwriters should ask for them.

CEO Kevin A. Plank, the former University of Maryland football player who created the company's sweat-resistant clothing, plans to sell 1.5 million shares, or about 10 percent of his holdings, for $54.1 million.

Another big gainer will be Rosewood Capital, a San Francisco investment firm that took a chance on the company three years ago by sinking $12 million into it. Now, Rosewood plans to sell almost all of its 3.6 million shares for $130.7 million -- more than 10 times the initial investment.

The remaining roughly $100 million in shares will be sold by Under Armour directors, executives and employees.

Rosewood's managing director, Byron K. Adams Jr., who is also an Under Armour director, would retain 3,000 shares. "It's been a home run for these guys," said Robbert Van Batenburg, head of research at Louis Capital Markets in New York, a global independent broker-dealer.

Both Rosewood and Under Armour declined to comment on the plans, which come after the expiration of a pact between company insiders and underwriters. Called a "lockout" agreement, it prevented the sale of shares for 180 days, starting with the November filing of the firm's prospectus with the SEC.

The prospectus outlined the details of Under Armour's initial public offering.

At the time of the IPO, Plank cashed in about $13 million in stock and Rosewood gained back its initial investment of $12 million.

Plank has about 15.2 million shares today.

The company went public Nov. 23, nearly doubling its anticipated stock price by the end of that first day to close at $25.30 on the Nasdaq stock market. Over the next two months, shares continued to rise, reaching a high of $40.30 in late January.

But the price plunged to $31 after the company reported lower than expected sales for the last quarter of 2005. The stock price has slowly climbed back.

Reaction to the pending stock sale was muted on Wall Street yesterday. Shares dipped 61 cents, or 1.6 percent, to close at $36.90.

The sale is "very common" after an initial public offering such as this, said Julia Spicer, executive director of the Mid-Atlantic Venture Association, a venture capital trade group.

Many companies hold second rounds of stock offerings about six months or so after an IPO. This gives early institutional investors such as Rosewood a chance to cash out and insiders a shot at making some extra money.

Typically, such rounds also net something for the business. But Under Armour won't make a dime on the sale of these securities, according to the SEC filing.

One analyst thought the sale would amount to a devaluation of the stock of other shareholders.

"All of the funds are going to insiders or early investors. So, existing shareholders are being diluted by about 15 [percent] and their company isn't adding any cash to the balance sheet," wrote Jeff Fischer, co-founder of online investment newsletter Complete Growth Investor, in an e-mail yesterday.


Sun reporter Jay Hancock contributed to this article.

An article in the Business section yesterday about Under Armour Inc. should have said that its stock fell last winter after the company reported lower-than-expected guidance for future sales, not lower actual sales.The Sun regrets the errors.
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