Nymex Holdings Inc., parent of the New York Mercantile Exchange and the Commodity Exchange Inc (Comex), took another step toward its promised initial public offering (IPO) Friday, announcing it had filed a definitive proxy statement with the Securities and Exchange Commission for an IPO. Shareholders will vote on the IPO at a special meeting on Oct. 12.

Included in the vote will be proposals to increase the number of shares available, set up a long-term incentive plan of stock options for Nymex executives, restructure the board of directors, and set rules for choosing board members and managing operations. The IPO and rules changes are being presented as a package. The company did not set a date for the offering, noting it still needed regulatory approvals to proceed.

Nymex will mail the definitive proxy statement to all of its shareholders of record as of the close of business on Sept. 12. Current stockholders also will be provided an opportunity to sell some of their stock as part of the IPO.

If the IPO is consummated by Dec. 31 at a price that values Nymex at $2 billion or more, General Atlantic, which bought a 10% ownership share earlier this year, will be required to pay an additional $10 million to Nymex without receiving any additional shares of preferred or common stock. The $10 million will be distributed as a special dividend to stockholders of record on March 13, the day before the closing of the transaction with General Atlantic.

Nymex said it also intends to pay a dividend total of $80 million to current holders of Nymex Holdings’ common stock (including the Series A Preferred Stock on an as-converted basis) as of the day immediately preceding the pricing of an IPO. Both dividends will only go to current stockholders.

From the proceeds of the IPO Nymex will pay $10 million to the owners of memberships in Comex, a metals exchange subsidiary Nymex acquired in 1994, in exchange for termination of that merger agreement. In addition Comex members will receive 8,400 shares of Nymex common stock for each Comex seat. The rest of the capital raised in the IPO will go for general corporate purposes, capital expenditures and working capital or to acquire or invest in businesses, technologies, products or services. No specific acquisitions are planned, Nymex said.

The IPO must be approved by a majority vote of the 81.6 million shares of voting stock outstanding. Completion of the IPO, along with certain stock conversions and issuances reserved for a long-term incentive plan will result in 95.5 million shares of unrestricted common stock, $0.01 par value per share.

Nymex has packed a lot of changes into the year so far. The move toward a public company was sparked by increasing competition in the exchange market, particularly from Intercontinental Exchange (ICE), along with a growing pool of potential customers, as hedge funds multiplied in the commodities markets. Nymex started the changes early in the year, accepting an investment of $160 million from General Atlantic LLC for a 10% equity stake (see Daily GPI, March 14).

In July Nymex announced it would be conducting an IPO to raise $250 million (see Daily GPI, July 18). And in the meantime, the exchange moved into the electronic arena, offering side-by-side trading with its trading floor and, by an agreement, on the CME Globex, the electronic trading system of the Chicago Mercantile Exchange (see Daily GPI, May 5). It also opened its membership to funds and other traders that previously were barred.

Nymex executives had been struggling in recent years to expand ownership from traditional seat holder members and open up trading to new participants. That move appeared to be accelerated when its up-and-coming rival, ICE, staged a successful IPO in late 2005. ICE upped the ante earlier this month, announcing an agreement to merge with the New York Board of Trade (see Daily GPI, Sept. 18).

Nymex said the joint book-running managers of the IPO are JPMorgan and Merrill Lynch & Co. The co-managers are Bank of America Securities LLC., Citigroup, Lehman Brothers and Sandler O’Neill + Partners LP.

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