Shoreham nixes units placement; Sabretooth aims for C$40.1 million; Churchill wraps stock sale

By Stephanie N. Rotondo

Portland, Ore., May 27 - Like the previous session, Wednesday was a busy day in private placement land, with many deals from the mining and pharmaceutical sectors coming to market.

But one deal that came to market on Tuesday was seen exiting on Wednesday. Shoreham Resources Ltd. canceled a C$3 million deal after the Toronto Stock Venture Exchange would not grant price protection. David Bending - who on Tuesday speculated the deal would not get done anyway - said the failed transaction could be a "blessing."

Meanwhile, Sabretooth Energy Ltd. announced a plan to raise C$40.1 million. To raise the funds, the company plans to sell subscription receipts.

Also in the mining sector, Churchill Mining plc said it completed a £5 million placement of stock.

In the pharmaceutical arena, Spectrum Pharmaceuticals Inc. said it will take in $20 million through a registered direct offering of units. Synairgen plc meanwhile said it will raise £6.35 million through a private placement, as well as through an equity subscription.

Shoreham cancels placement

Shoreham Resources suspended a C$3 million private placement of units, according to a press release.

The deal was originally announced on Tuesday. Each common share and warrant unit would sell at C$0.25 and each warrant was exercisable at C$0.30 for one year.

But in an interview Tuesday - and again in a follow-up on Wednesday - David Bending, Shoreham's president and chief executive officer, said that the terms were not acceptable, given that the price was at a significant discount to the current trading price.

Bending said that the offer came from a group in England - he declined to specify which group - that had a "history of strong financings."

"But so far they haven't made the right offer," he said Tuesday.

When the deal was presented, he continued, Bending was forced to make a snap decision. He agreed in principal and, in response, shareholders sent the company's stock down 20%.

"It just happened that that part of the negotiation was awkward," he said.

The stock's decline came as a blow, Bending stated, as the equity had been moving higher before the announcement of the deal. The run-up was attributed to another financing that was completed at C$0.30 per share, as well as news regarding some of the company's projects.

Also, Shoreham filed a price reservation Form 4A with the Toronto Stock Venture Exchange. Bending believed on Tuesday that the Exchange would "very likely require repricing due to the stock's performance." In the end, that was in fact the case.

"The price protection application filed May 19, which specified and requested approval for the placement and warrant prices, must be adjusted and the price adjusted accordingly due to the impact of news which was subsequently released," the company said in its statement.

Bending noted that the company needs the C$3 million to fund development of its Marudi Mountain Project in Guyana.

"We like what we're doing down here; we think it's very important," he said. "We've got a good program here in Guyana."

Still, Bending is hopeful that the right offer will come along, perhaps even from the group in England.

"We are receptive. We are friendly. We'll see," he said. "We were happy they offered us the money, but we believe that we should be looking for money at a higher price."

"Perhaps it was a blessing that we did not close the deal," he opined. "A month ago, it would have been a good deal, but now it is not."

Shoreham's stock (TSX Venture: SMH) ended unchanged at C$0.33.

Shoreham Resources is a Langley, B.C.-based explorer of advanced precious metal and polymetallic deposits.

Sabretooth aims for C$40.1 million

Sabretooth Energy will sell 46.6 million subscription receipts in its effort to raise C$40.1 million.

In the underwritten deal led by Cormark Securities Inc., the receipts will sell at C$0.86 per receipt. There is also a greenshoe for an additional 6.99 million receipts.

The financing comes just one day after the company announced a C$9.44 million private placement of stock. Both transactions will be used to fund the company's planned acquisition of a private oil and gas company.

Sabretooth's stock (Toronto: SAB) gained a penny, or 0.75%, to C$1.32.

Sabretooth is a Calgary-based oil and gas exploration and development company.

Churchill wraps stock sale

Churchill Mining settled a £5 million private placement of stock, the company announced.

Churchill sold 10 million ordinary shares at 50p per share. The newly issued shares represent 12.9% of the company existing share capital.

Proceeds will be used to fund the company's East Kutai Coal Project, located in Indonesia. In May 2009, Churchill said the project had more than doubled producing 3.18 billion tones of thermal coal.

Churchill's stock (London: CHL) closed at 49.37p. Market capitalization is £33.87 million.

Churchill Mining is a Subiaco, Western Australia-based coal mining and exploration company.

Spectrum plans direct offering

Spectrum Pharmaceuticals plans to raise $20 million via a registered direct offering of units.

The Irvine, Calif.-based company will issue approximately 3.9 million common shares, along with warrants good for an additional 1.9 million shares. Each unit - containing one common share and one half warrant - will sell at $5.11 per unit. The warrants are exercisable at $5.11 per share beginning six months after issuance. Upon the first exercise, the warrants will expire in 90 days.

The units will be sold to three investors, according to a press release. The investors include Federated Kaufmann Fund.

Paul Arndt, senior manager of investor relations, said in an interview with Prospect News that Spectrum was not shopping for new financing when the opportunity for the deal came along.

"Three of our major shareholders came to us and said they would like to invest directly into the company," he said. "And when somebody presents us with a check, we're like 'OK.'"

"They have been in us for several years now," he added about the investors.

Arndt added that proceeds would be used mainly for general corporate purposes.

"Keeping the lights on and all that good stuff," he quipped.

"It also keeps us in a stronger financial position in case something comes up," he continued.

Settlement is expected by May 29.

Spectrum's equity (Nasdaq: SPPI) fell 34 cents, or 6.43%, to $4.80. Market capitalization is $116 million.

Spectrum Pharmaceuticals is a developer of cancer drugs.

Synairgen to raise £6.35 million

Among other pharmaceutical companies, Synairgen announced it would take in £6.35 million through a private placement of stock and a subscription of equity.

Under the terms of the placement, the company will issue approximately 29.5 million new ordinary shares at 17p per share. For the subscribed offering, the company will sell approximately 7.8 million shares to company directors, among others, also at 17p per share.

The price per share represents a 4.23% discount to the company's closing share price as of May 26, according to a press release.

Proceeds will be used in part to finance two planned phase 2a inhaled interferon beta proof of concept studies in asthma and chronic obstructive pulmonary disease.

"We are delighted to receive such strong support for this fundraising, which will allow us to finance the planned phase 2a studies of our exciting inhaled interferon beta product against virus-induced exacerbations in asthma and COPD," said Simon Shaw, chairman, in the release. "Thereafter, assuming the studies are successful, we should be well placed to seek out-license terms for these two potentially very significant markets."

Settlement is expected by June 19.

Synairgen's shares (London: SNG) closed at 17.75p.

Synairgen is based in Southampton, England.

© 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.