Developers Diversified plans $112.5 million direct placement; BPZ wraps $43.6 million placement

By Stephanie N. Rotondo

Portland, Ore., Feb. 24 - Mining and gas companies once gain dominated the PIPE market Tuesday, but it was a direct placement from Developers Diversified Realty Corp. that topped the list.

Developers said in a regulatory filing Tuesday that it had arranged the placement with the German-based Otto family, which develops and manages shopping centers in Europe. Under the terms of the deal, 30 million new shares of common stock will be issued for a total price of $112.5 million.

Meanwhile, BPZ Resources Inc. completed a $43.6 million stock placement. The company told Prospect News that it was "extremely happy" with the outcome of the deal. Proceeds will be used to further develop some of the company's gas fields.

Among mining companies, Luna Gold Corp. increased a previously announced stock sale to C$31.5 million from C$8 million. The company said the deal, first announced in January, was oversubscribed and therefore there was an opportunity to raise more cash in a "challenging market environment."

Australian-based Focus Minerals Ltd. is planning to raise A$25 million to refurbish its Three Mile Hill plant. The company's chairman said that the next step is to complete the project on time and within budget.

Developers direct placement

Real estate investment trust Developers Diversified arranged a non-brokered registered direct offering of stock, the company said in a filing with the Securities and Exchange Commission.

The Beachwood, Ohio-based company will issue 30 million shares to Alexander Otto and his family, the owners of ECE Projektmanagement of Germany, a leading European developer and manager of shopping centers, according to a press release. Half of those shares will be sold at $3.50 per share, while the other half will be issued at $4.00 per share. Warrants for 10 million shares at $6.00 for five years will also be issued.

The deal totals $112.5 million. Proceeds will be used for working capital and general corporate purposes.

"We believe that we have found the ideal strategic investor for our company," said Scott Wolstein, Developers Diversified's chairman and chief executive officer, in the press release. "The Otto family's business acumen in shopping center development and management, as well as their vast retail holdings, will provide a distinctive synergy as we share our retail real estate expertise.

"This investment provides a unique opportunity for our company to tap into an expanded pool of real estate, retail and financial expertise, and to share best practices on a national and international level. In addition, the transaction would provide us with significant capital for debt reduction, thus allowing us to meet our continued objective of reducing leverage and improving liquidity."

The Otto patriarch also commented on the transaction.

"Our first shopping center was built in 1969 in Germany," Otto said in the release. "Today, we continue our heritage of breathing new life into the city center retail trade with properties in 15 countries across Central and Eastern Europe. We view Developers Diversified Realty as a valuable investment and a key stepping stone for our global expansion and partnership initiatives. We look forward to joining forces with this outstanding team."

Developers Diversified's stock (NYSE: DDR) closed $1.35, or 54%, higher Tuesday at $3.85. Market capitalization is $432 million.

BPZ closes $43.6 million deal

BPZ Resources closed its $43.6 million private placement of common stock, the company said Tuesday.

The company sold 14.3 million shares at $3.05 per share, according to a press release. No warrants were issued.

"We didn't need to," Greg Smith, director of investor relations and corporate communications, told Prospect News concerning the lack of warrants. "Warrants are usually only issued as incentive and we didn't need it."

Furthermore, International Finance Corp. has the right to participate in the offering, which could result in an additional 1.4 million shares being sold, bringing the total proceeds of the deal to $48 million.

Smith said that many of the investors that took part in the deal were existing investors that "like our story."

"We're extremely happy [with the deal's outcome]," Smith remarked. "When we entered into negotiations, we thought there would be a much deeper discount."

At the time, Smith explained, BPZ's stock was hovering around $3.35 per share. During discussions with investors, two of the investors "stepped up and priced it at $3.05."

BPZ chose the PIPE market over other financing routes because it was a quicker way to raise the funds, Smith said.

"Our cash position was getting low," he said. "We didn't want to take the chance so we just pulled the trigger on the PIPE."

Smith added that BPZ does have a shelf registration, but as the company had not yet put out its 10-K, the process would have been much slower going.

Funds from the transaction will be used for development of the company's Corvina and Albacora oil fields.

The company's stock (Amex: BPZ) ended 34 cents, or 10%, better at $3.74 on Tuesday. Market capitalization is about $365 million, according to Smith.

BPZ Resources is a Houston-based oil and gas exploration and production company.

Luna ups oversubscribed stock sale

Luna Gold said late Thursday that it was increasing a previously announced placement of stock to C$31.5 million from C$8 million, as it was oversubscribed.

The shares will be sold for C$0.12 per share. The non-brokered deal was originally announced on Jan. 27, according to a press release.

"It was probably the quickest and easiest way to raise the funds," Chris de Groot, company spokesperson, said in an interview with Prospect News, explaining why the company went the private route versus a public offering.

De Groot added that in the current "challenging market environment," the company saw an opportunity to raise more cash and took it.

"Obviously we want to advance our projects in as expedient a manner as we can," he said. He noted that the company had received interest from a variety of investors and "mining-savvy veterans."

No warrants are included in the transaction. De Groot said the decision to exclude warrants in the deal was a move to keep the company's equity "as minimally diluted as possible."

"I think it shows the strength of the deal," he said. "If you don't have to issue half warrants or whole warrants, why would you?"

Proceeds from the deal will be used in part to complete a feasibility study at Luna's Piaba mine.

Luna Gold's stock (TSXV: LGC) gained $0.005, or 3.33%, on Tuesday to $0.155.

Luna Gold is a Vancouver, B.C.-based gold and exploration company.

Focus to issue A$25 million equity

Focus Minerals said it would raise A$25 million through a stock placement to refurbish and modernize its Three Mile Hill treatment facility and for further exploration and development.

The company will issue 1.25 billion shares at A$0.02 per share.

"These funds will provide Focus with the opportunity to substantially ramp up production at Coolgardie, elevating us to a new level in terms of our position among gold producers in Australia," said Don Taig, chairman of the company, in a press release. "Our priority now is to ensure that the Three Mile Hill plant is completed on time and within budget."

Focus Minerals' equity (Australia: FML) dropped $0.003, or 11.11%, to $0.024.

Focus is a Perth, Western Australia-based gold, nickel and other base metal mining and exploration company.

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