Spice to cut debt with placement; Universal Travel welcomes institutional support; ABC reveals new loans

By Kenneth Lim

Boston, Sept. 3 - Spice plc said it plans to raise about £50 million through a private share placement to reduce its debt ratio.

Universal Travel Group Inc. added more institutions to its investor base through a $7.11 million stock placement, while ABC Funding, Inc. said drew down about $33.5 million from new revolving credit and term loan agreements for an acquisition.

Spice to lower debt

Spice said it plans to sell about £50 million of its common stock at 102p a share in a private stock placement.

KBC Peel Hunt is the agent on the deal.

The placement price was a discount of about 5.4% to Spice's closing mid-market price on Sept. 2.

Spice, a Morley, England-based provider of utility support services, plans to use the proceeds to reduce its bank debt.

Through a press release, the company said it has relied primarily on bank debt in recent years to fund various acquisitions. But the margin payable on the debt has also increased as the principal has gone up.

"The group intends to use the net proceeds of the placing to reduce its bank debt," Spice stated. "In so doing the group will pay a lower margin on its remaining bank debt, prior to any reinvestment.

"The placing will also improve the ratio of debt to EBITDA and enhance interest cover. After taking account of monies raised from the placing, the group's committed facility headroom will increase to around £80 million out of total bank facilities of £170 million. These bank facilities are not due for renewal until 2012."

The company also said the placement should improve the liquidity of the stock.

"The directors believe that the placing should improve the market liquidity in the company's shares and that this will be of benefit to shareholders taken as a whole," the company stated.

"Having regard to the continued progress in the current trading and prospects of the company as referred to above, coupled with the placing's impact on the company's marginal cost of debt and taking account of the additional shares which will be in issue following admission, the directors believe that the placing will marginally dilute earnings per share" by about 1% in the year to April 30, 2010.

Universal Travel closes deal

Universal Travel said it completed its $7.11 million stock placement to institutional investors.

The company sold about 4.8 million shares at $1.55 apiece. Universal common stock (OTCBB: UTVG) closed at $1.53 on Wednesday, up by 14.18% or $0.19.

Universal Travel, a Los Angeles-headquartered travel company that focuses on the China market, said it will use the proceeds for projects related to online integration and other general corporate development purposes.

The stock was placed with institutional investors that included Chinamerica Fund LP, Access America Fund, Pope Investments II LLC, Heller Capital and Investment Hunter LLC.

"'We are determined to capture the opportunities presented by the tourism and business travel markets in China and will use the proceeds to fuel our growth initiatives," Universal Travel chief executive Jiangping Jiang said in a statement. "We are also pleased that such respectable institutional investors have recognized us and placed their confidence in our long-term growth plans."

Access America president Christopher Efird said in the statement: "We are very excited about the growth prospects of Universal Travel Group. Given the value of other public travel services providers, we believe that Universal Travel Group is one of the Chinese companies in the space with the most potential to build on its current platform to provide premium services to consumers and build significant franchise value for its shareholders."

Access America, Chinamerica and Pope also bought an additional 5 million shares of Universal Travel from a non-management shareholder.

"After several months of due diligence, including in-depth analysis of the Chinese travel space, we believed this dynamic company was significantly undervalued," Chinamerica managing director Beau Johnson stated.

"We are hopeful that when the investment community at large recognizes that a group of sophisticated institutional investors with successful track records investing in, and supporting Chinese companies have accumulated a meaningful position in UTVG that, over time, shareholder value will rise to intrinsic levels. In addition to acquiring this large block of stock from a single non-management shareholder, we had enough confidence in the company to place the PIPE financing at a premium to the retail price per share in the open market, something rarely done in our space."

ABC uses new loans

ABC Funding, which will be renamed Cross Canyon Energy Corp. following its acquisition of Voyager Gas Corp., said it drew about $33.5 million from two loan agreements to help fund the takeover.

ABC said it entered into a new revolving credit agreement and a term loan agreement through agent CIT Capital USA Inc.

At closing, ABC drew $11.5 million under the revolver and the full $22 million under the term loan.

Both loans are secured by the company's assets.

ABC also issued a seven-year warrant to CIT for the purchase of 24.2 million shares of ABC common stock at $0.35 per share.

ABC (OTCBB: AFDG) common stock closed lower by 25% or $0.20 at $0.60 on Wednesday.

The New York-based acquisition company was created to seek opportunities in the oil and natural gas industry.

"The acquisition of Voyager Gas Corporation is an important strategic step with respect to the current and future growth of the company, and provides us with a strong operating footprint in a very prolific basin in South Texas," ABC chairman and chief executive Robert P. Munn said in a statement.

"With the acquisition of these properties, Cross Canyon Energy becomes a substantial independent oil and gas company, with the ability to meaningfully grow our production and reserves through a combination of low risk recompletions and workovers, plus the drilling of undeveloped locations. Immediately, this transaction is highly accretive to the company's cash flow and asset value in keeping with management's ongoing commitment to aggressively grow shareholder value."

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