SRA International announces secondary offering plans

SRA International Inc. has filed a registration statement with the Securities and Exchange Commission for a second public offering of its common stock, the company announced May 29.

The company had its initial public offering last spring. It will offer almost 2.5 million shares issued by SRA, and another 257,000 shares being sold by some stockholders.

Managing the offer are Citigroup; Goldman, Sachs & Co.; Legg Mason Wood Walker Inc.; Adams, Harkness & Hill Inc.; BB&T Capital Markets; and RBC Capital Markets.

According to the company's SEC document, SRA plans to use the proceeds for general purposes, including working capital and capital expenditures, future acquisitions and investments.

The company declined to discuss the timing of the filing, citing the SEC's required quiet period.

By contrast, DigitalNet Inc. of Herndon, Va., the private firm which last year acquired Getronics Government Solutions Inc., recently withdrew its filing for an initial public offering with the SEC. DigitalNet attributed the withdrawal to "current market conditions."

Jerry Grossman with Houlihan Lokey Howard & Zukin, McLean, Va., said the differences between the two companies' circumstances explained their behaviors.

"DigitalNet was a harder story for the market," Grossman said. "There was the recent acquisition by DigitalNet of the Getronics government business, so there already was a change of control in the business. I think there was a recent loss of a major contract. Those two factors combined, given it was a new offering, [made] it a little difficult."

SRA, on the other hand, is a more known entity in the market, Grossman said. The company has been public for a little over a year, and it successfully completed a couple of acquisitions during that period. "I think in their case, there's a group of investors out there who have gotten to know the company," said Grossman, who also writes a market watch column for Washington Technology.

Grossman said SRA likely would use the funds raised with the secondary offering to "rebuild the cash war chest and, to a much smaller extent, provide liquidity for some of their existing shareholders."