BTG Plans 30 Percent Initial Public Offering

BTG Inc., a $103.6 million revenues high-tech government contractor and former Washington Technology Fast 50 company, will offer 30 percent of the company in an initial public offering.

The deal will be managed by Philadelphia-based Janney Montgomery Scott and Ferris, Baker Watts of Washington. At a projected price of $9 per share, the sale would raise $12.6 million for the company and $3.15 million for private investors, creating a total market value of nearly $60 million. Price-to-earnings ratio based on annualized six months figures would be 16:1.

BTG Inc., a $103.6 million revenues high-tech government contractor and former Washington Technology Fast 50 company, will offer 30 percent of the company in an initial public offering.

Founded 12 years ago by CEO Ed Bersoff, 52, BTG has specialized in government national security markets, which comprise 65 percent of its customer base. Another 25 percent comes from civil-sector government clients.

The company has quadrupled revenues from its 1990 base of $26.3 million, but professional services sales increased by only 35 percent to $35.5 million during the period. The BDS reseller subsidiary, acquired in 1992, produced $68 million revenues in 1994, up from $24.4 million in 1993. BTG's 1994 revenues, restated to reflect the acquisition of Delta Research, are $112.2 million.

The balance sheet reflects writedowns of $500,000 in 1992 and $400,000 in 1994 relating to unnamed investments.

While one venture capitalist suggested that "BTG is crazy to go public now," a partner in a local financial services boutique said there has been an uptick in investor interest in government contractors lately and, given the company's excellent growth, the offering "might do fine" at a projected price of $8-$10 per share.

Selling shareholders include three venture capital firms and two co-investors inherited from the BDS merger: the CEO Venture Fund and chairman James Colker, each cashing out $737,000 and retaining 5.5 percent of shares; Edison Fund and its General Partner John Martinson, each cashing out $659,700 and retaining 4.8 percent; and NEPA Venture Fund, cashing out $581,400 and retaining 4.1 percent. Colker and Martinson are directors.

James Valentine will sell 77,000 shares but retain 5.1 percent of the company; and Don Wallach, 59, a director since 1982 who was temporarily ousted from the board following the BDS acquisition, will hold onto 4.3 percent of the company.

Among top executives, Vice President and Chief Technical Officer Clifton Baumgardner, 44, with 3.3 percent; and BDS subsidiary President Paul Collins, 43, with 2.1 percent, are holding onto their shares. Other than Bersoff, the highest paid executive is CFO Jack Hughes, 42, who pulls down $227,600 annually, but owns just 770 shares. C. Scott Reuther, 57, president of BTG Information Systems, the other ranking executive, owns 18,570 shares. Neither is selling.

Although Bersoff has publicly criticized the region's lending community, the prospectus discloses that BTG holds a $35 million revolving credit line with First Union Bank. Hogan &amp Hartson are BTG's attorneys and KPMG Peat Marwick the accountants.

BTG provides a range of computer systems services and products to government and commercial clients, with offices in the United States and Europe. In addition to systems engineering and integration, it also is a value-added reseller of computer hardware and software under its BDS Technologies sector. Its BTG Systems branch specializes in correlation and data fusion systems that collect, display and analyze information from multiple sensors; intelligence support; multimedia information management and process re-engineering

Bersoff's Deal

Holding on to each one of his 1.374 million shares -- 22.5 percent of the company -- founder and CEO Ed Bersoff would be worth $12.4 million.

In addition to his $353,700 annual compensation, on Oct. 28, 1994, Bersoff won a guarantee of $240,000 annually, a seat on the board, and a six-year employment agreement renewable in automatic two-year extensions, each of which kicks his compensation up by 10 percent.

His wife Marilyn Bersoff, a company vice president but not one of its five most highly compensated officers, owns 72,799 shares worth $655,000, and 23,500 options worth $211,500, totalling 1.6 percent of the company.

Gingerelli's Deal

CEO George Gingerelli will officially cash out of Delta Research for $3 million at the conclusion of BTG's initial public offering, with another $1 million in the form of a four-year, $400,000 non-compete agreement and $590,000 consulting fees for his new company, GMG Enterprises.


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