Doral pens $610 million stock offering that will effect change in control

By Sheri Kasprzak

New York, May 17 - Doral Financial Corp. grabbed PIPE headlines on Thursday when the company announced a $610 million stock deal that will change control of the company's shareholder base.

A newly formed group called Doral Holdings agreed to buy 968,253,968 shares in the offering at $0.63 each.

The holding company is made up of Bear Stearns Merchant Banking, Marathon Asset Management, Perry Capital, the D.E. Shaw Group, Tennenbaum Capital Partners, Eton Park Capital Management, Goldman Sachs & Co., Canyon Capital Advisors and GE Asset Management. The holding company will own 90% of Doral's stock once the deal is done.

The company's stock did not respond well to the offering, sinking by 19.35%, or 24 cents, to close the session at $1.00 on Thursday (NYSE: DRL). The stock sank to this level by 9:40 a.m. ET, not long after the announcement of the deal was made.

Proceeds from the deal will allow Doral to repay at maturity $625 million in floating-rate senior notes due July 20. The funds will also allow the company to settle an existing consolidated securities class action and shareholder derivative suit.

Transaction 'dilutive,' chairman says

"The transaction comes at the end of an exhaustive process by the company's board of directors to explore financial and strategic alternatives to secure Doral's future," said Dennis Buchert, the company's chairman, in a statement released Thursday morning.

"It will permit Doral to continue as a well-capitalized major financial institution in Puerto Rico. Although highly dilutive to existing common shareholders, the board believes it is the best, and probably the only, means to retain some value for existing shareholders and enable them to participate in the future of the company."

"The successful consummation of this recapitalization will resolve the company's anticipated liquidity needs and will position us to fully focus on our long-term strategic priority of profitability growing Doral, enhancing our market presence in Puerto Rico and building the institution," said Glen Wakeman, the company's chief executive officer, in the news release.

"We are very appreciative of the extraordinary efforts of our employees and look forward to continuing to transform Doral into a first-class community bank. I am confident that our talented and committed team will accomplish this goal."

Based in San Juan, Doral is a financial services company with mortgage, banking, insurance and institutional securities segments.

BreitBurn raises $130 million

Moving to the energy sector, BreitBurn Energy Partners LP wrapped a $130 million stock sale as part of its acquisition of oil properties from Calumet Florida LLC.

A group of institutional investors bought 4,062,500 common units at $32.00 each, a 3.8% discount to the five-day volume weighted average share price for the period ending May 16.

Proceeds will be used for the acquisition of the properties located in Florida, which is expected to cost $100 million. The rest will be used for the repayment of $30 million in outstanding debt incurred during the acquisition of the Lazy JL field in January.

"We are pleased to announce another acquisition consistent with our proven strategy of acquiring and developing complex fields with large amounts of original oil in place and shallow production declines," said company co-chief executive officer Randy Breitenbach in a statement. "This is a great fit given our experiences with established producing assets and the strength of our technical and exploitation team."

The company's stock gained $1.24, or 3.75%, to end at $34.33 (Nasdaq: BBEP).

Los Angeles-based BreitBurn is an oil and gas partnership focused on acquiring, exploiting and developing oil and gas properties.

Action Energy's C$15.01 million deal

In other energy-related offerings, Action Energy Inc. sealed a C$15.01 million private placement of flow-through shares.

The company sold 3.95 million shares at C$3.80 each.

Wellington West Capital Markets Inc. was the lead underwriter for the deal.

Proceeds will be used for Canadian exploration expenses.

On Thursday, the company's stock gained 25 cents to close at C$3.55 (TSX Venture: AEC).

Calgary, Alta.-based Action is an oil and natural gas exploration company.

Marco plans $23.18 million deal

Elsewhere, Marco Community Bancorp, Inc. said it is gearing up to close a $23,180,787 private placement with the Barron Collier and Lutgert families, Kevin Hale and Michael Morris.

The investors will buy 3,566,275 shares at $6.50 apiece.

After the deal was announced in the morning, the stock jumped 9.93%, or $1.40, to close at $15.50 (OTCBB: MCBN).

Once the deal is completed, the investors will share controlling interest in Marco, according to a statement released Thursday morning by the company.

Closing of the offering is contingent upon the company's shareholders approving an increase in the number of authorized common shares to 24 million.

"This recapitalization provides two important things to our current shareholder base," said Richard Storm, the company's chairman, in a statement.

"First, they will receive a cash dividend in excess of the per-share price (as adjusted for splits) paid in our initial offering in 2004. Second, they will be able to continue to own shares in the company and benefit from the support and guidance of a strong new investor group led by the Colliers, Lutgert and Kevin Hale with the leadership of experienced bankers such as Michael Morris."

"Our group is excited to partner with the company and Marco Community Bank," said Hale, in the statement. "They have built an excellent community bank in Collier County [Florida] and we look forward to building on its success as we continue to growth the franchise over the coming years."

Based in Marco Island, Fla., Marco Community Bancorp is a holding company for Marco Community Bank and for MCB Commercial Lending Corp.

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