Tully's says it will file to go public, but not now

Like a presidential wannabe who can't quite bring himself to announce his candidacy, Tully's Coffee took the unusual step Wednesday of saying that it intends to file a plan next month to go public at some later date.

Most companies just file with the Securities and Exchange Commission when they are ready to go public.

But Seattle-based Tully's, which said it wants to raise about $50 million through the initial public offering, has an annual meeting in two weeks, and now it can answer shareholders' persistent questions about when they might cash in their shares.

Tully's roughly 6,000 investors have waited a long time.

Launched in 1992, it has yet to turn a true profit. In 2005, it earned $20 million during one quarter from the sale of its Japan operation and a related transaction.

The company grew quickly in the 1990s in a drive toward what it hoped would be a lucrative public offering. Then the market tumbled, and its shot at a 2000 or 2001 offering vanished.

Tully's has struggled ever since. For the first nine months of this fiscal year, it lost $7.4 million. Although the company is privately owned, it must file financial and other statements because it has so many shareholders.

Chief Executive John Buller said last fall that he doubts Tully's can turn a profit until it adds more stores. It has about 125 now and not enough cash to open more.

That's where an IPO might come in. But Buller is keeping mum about how Tully's would spend the $50 million it wants to raise, citing SEC rules that don't allow him to divulge details, including which investment bank would underwrite the deal or which stock market the stock might trade on.

He said only that Tully's will move "as fast as we can" to do the offering. A news release said the money would go toward a range of things, from expansion of Tully's retail and wholesale operations to general corporate purposes.

It is hard to estimate how much Tully's shares might be worth on the open market.

The company's shareholder equity on Dec. 31 was a negative $1.9 million, and in December a major shareholder sold Tully's common stock for 25 cents a share, according to SEC filings.

Still, there are other ways to value a stock, said Bob Toomey, senior vice president of the Seattle brokerage and investment firm E.K. Riley Advisors.

"My sense is they probably can pull it off, because there's still a fair amount of interest in the sector," Toomey said. "That said, there are a lot of public companies in this business, and you have to wonder, is this market becoming saturated?"

John Roach, a Tully's shareholder who owns M&R Equipment, a Seattle forklift company, isn't sweating it.

"It's a long-shot investment," said Roach, who paid more than a dollar a share and traded some equipment for his roughly 21,000 shares. "I put it in a drawer and said, 'Thank you very much if it happens.' "