Ambac completes $95 million placement; Firstgold upsizes deal; Kimber sale sees institutional interest

By Kenneth Lim

Boston, March 12 - Troubled bond insurer Ambac Financial Group Inc. completed a $95 million private stock placement as part of a $1.5 billion financing package as it sought to maintain its credit rating.

Meanwhile, Firstgold Corp. said it sold a second tranche of stock-and-warrant units in a private placement that raised more than initially planned.

Kimber Resources Inc. closed its C$6 million non-brokered placement with a handful of investors taking the bulk of the offered units.

Ambac completes financing

Ambac said it sold $95 million of common stock to two financial institutions as it completed a $1.5 billion fundraising exercise and saved its credit rating from being downgraded.

New York-based Ambac said the private placement comprised 14.1 million common shares at about $6.75 per share. Ambac stock (NYSE: ABK) closed at $6.86 on Wednesday, lower by 11.25%, or 87 cents.

Ambac also closed a $1.155 billion public offering of common stock, which consisted of 171.1 million shares at the same price. The company also raised $250 million from a public offering of equity units that carry a distribution rate of 9.5% and an initial threshold appreciation premium at 18% over the stock offering price.

Proceeds from these offerings will be contributed to Ambac's subsidiary, Ambac Assurance Corp., in order to increase its capital position, except for approximately $100 million, which the company will use to pay principal and interest on its debt, to pay its operating expenses and to pay dividends on its capital stock.

"We were able to execute a significant capital raise in a very challenging market," Ambac chairman and chief executive Michael Callen said in a statement. "For this, we are thankful to our investors and other market participants for their strong support. Throughout this process, we remained focused on our ultimate goal of safe-guarding and protecting our triple-A franchise. This is a critical milestone in our plan to restore market confidence in our financial strength. The current market environment offers an excellent opportunity for Ambac to capitalize on its long-standing relationships in many sectors."

Following the closing of the deals, Moody's Investors Service and Standard & Poor's took Ambac off review for a possible downgrade and affirmed its current rating. But both have a negative outlook on Ambac's credit. Fitch Ratings kept its AA rating on Ambac.

"Ambac's recently completed $1.5 billion capital raise was a critical factor leading to the confirmation of the Aaa insurance financial strength ratings at the company," Moody's said in a statement.

S&P said, "The additional capital raised, plus the capital-enhancing benefits of Ambac Assurance's six-month moratorium on new structured finance business production, provides the company with capital in excess of the minimum necessary to support its 'AAA' rating."

The successful completion of the capital raising came as no surprise for the market, a sellside trader said.

"The deal was as good as done the day they announced it," the trader said. "None of the banks would have let Ambac get into trouble, because then they'll have even more problems on their hands. Even if nobody wanted any of the shares, the banks would have bought it themselves."

Firstgold closes deal

Firstgold said it raised $3.14 million of stock and warrant units in the second part of a $6.46 million private placement, beating earlier fundraising expectations.

The company sold 4.84 million units at $0.65 per unit in the second tranche, about $0.14 million more than originally planned. It raised $3.31 million from the first tranche by selling 5.09 million units. The entire deal priced on Feb. 15 for $6 million.

Each unit consists of one common share and one half-share warrant. Each whole warrant is exercisable at $0.80 for 18 months.

Firstgold stock (OTCBB: FGOC) closed at $0.66 on Wednesday.

Firstgold, a mining company based in Cameron Park, Calif., said the proceeds of the deal will be used to develop its Relief Canyon Mine project, for exploration and to fund general corporate purposes.

The company is also set to place at least $5 million of convertible debentures as part of its fundraising efforts. Firstgold said it is currently in negotiations with a U.S.-based institutional investor to place out the convertibles.

"We are very pleased to close on this second tranche," Firstgold chairman and chief executive Steve Akerfeldt said in a statement. "The gold markets are strong of course and we are pleased with the response we have received from the investment community. We hope to complete the convertible debenture portion of the financing in the near future and then continue forward with our plan to list on the Toronto Stock Exchange."

Kimber deal oversubscribed

Kimber Resources said the over-allotment option was fully exercised in its placement of stock-and-warrant units that raised a total of C$6 million.

The deal was originally set at C$5 million with a C$1 million greenshoe. Kimber said it sold 8 million units of one common share and one half-share warrant at C$0.75 per unit. Each whole warrant expires in two years and is exercisable at C$1.25.

Kimber common stock (TSX: KBR) rose 6.19% or C$0.07, to close at C$1.20 on Wednesday.

Kimber, a Vancouver, B.C.-based gold and silver exploration company, said the proceeds will be used for exploration.

"I am pleased to announce the closing of this C$6 million financing as well as our plans to commence drilling at Monterde within the next four to six weeks," Kimber president and chief executive Gordon Cummings said in a press release. "Under the leadership of Marius Mare, vice president, exploration, and our senior Mexican geologists, our technical team has been making excellent progress in planning and preparing our initial drill targets. This is an exciting period for Kimber as we embark on an aggressive exploration campaign at Monterde in tandem with advancing the Carmen deposit."

Kimber said the units were placed with institutional and accredited investors in Canada, the United States and elsewhere. Two North American investment funds, including Sprott Asset Management Inc., and a publicly listed mining company took more than 75% of the placement.

Sprott held about 14% of Kimber's outstanding shares before the placement. Also participating were Kimber directors Cummings, Peter Nixon, who is also the chairman, and Leanne Baker.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.