Freescale's value falls from $17.6bn to $5.5bn in five years

Freescale values itself at $5.5bn compared to the $17.6bn valuation put on the company five years ago in the 2006 takeover by New York private equity company Blackstone.

The $5.5bn valuation comes as Freescale prices its upcoming IPO. It will put 43.5m shares up for sale at $22-24.

When Blackstone bought Freescale it paid $36 a share.

The idea is to raise $1bn to pay down some of the debt loaded onto Freescale by Blackstone after the takeover.

The original amount of the debt was $9.4bn, but this has been reduced to $7.5bn by buy-backs.

The debt forced Freescale to find $700m a year in interest payments. Freescale has been unprofitable ever since the takeover and made a $1bn net loss last year.

Blackstone’s mistake in valuing Freescale came from it using a metric known as 'discounted cash flow' which assumes future revenues at a certain level – a hazardous metric to use in the notoriously volatile semiconductor industry.

Blackstone was also pushed into over-paying because of competing interest from its fellow New York private equity company KKR.

Blackstone is being sued for not revealing, in its own IPO, the full extent of its exposure to Freescale’s valuation decline