Enseco prices C$5 million of stock; Student Transportation raises C$50 million from two investors

By Kenneth Lim

Boston, April 15 - Enseco Energy Services Corp. priced a C$5 million private placement of shares that the company expects will be its last fundraiser before it turns cash flow positive.

Meanwhile, Student Transportation of America Ltd. said it is selling C$50 million of stock to two major investors.

Enseco raises C$5 million

Enseco Energy said it priced a C$5 million private placement of shares. Plans for the placement were announced April 2.

The company will sell 11.12 million common shares at C$0.45 apiece. Enseco stock (TSX: ENS) closed at C$0.58 on Tuesday, up by C$0.01, or 1.75%.

FirstEnergy Capital Corp. is the agent.

Enseco, a Calgary, Alta.-based oil and gas services company, said proceeds will be used to fund its capital expenditure program, to repay debt and for general corporate purposes.

"It's very significant for us," Enseco senior vice president and chief financial officer Aly Khan Musani told Prospect News. "It allows us to fully develop our capital program for the year and to execute on the plan that we had put in place."

The offering could be Enseco's last fundraiser before it becomes cash flow positive, Musani said.

"For the foreseeable future we don't have any plans to go back to the market at this point in time," he said. "We should be cash flow positive this year."

Enseco will in fact become cash flow positive even without the new capital, Musani said.

"We're going to be there anyway, regardless," he said. "Our businesses are picking up, all our business lines are in. This allows us to expand our capital program, so rather than sitting on the sidelines and waiting for the money to come in, we can go out and expand our business right now."

The deal priced close to the month-before weighted average price of the common stock, Musani said.

"It was in the context of the market," Musani said. "You'd always like it to be higher. No one's ever satisfied. We'd like to have it higher, but we'd like to have the capital at the same time."

The capital-raising market is currently not in the favor of issuers, he added.

"Especially for micro-cap companies," he said. "That's where you have to price it accordingly, because you have to have a discount for liquidity and heightened risk. We're illiquid, so our pricing movements tend to be more exaggerated."

Enseco could not wait for the market to improve, and it did not want to issue debt, Musani said.

"I think ultimately that [waiting] would have been detrimental to the company in the long term," he said. "Currently our debt levels are within our range of comfort, and we didn't want to take on more debt. The oil and gas services industry is pretty volatile, and you don't want a significant amount of leverage. Things can change very quickly and you don't want to be caught."

Student Transportation plans placement

Student Transportation of America said it is selling C$50 million of stock to a new investor and an existing shareholder.

The company will sell 8.27 million common shares in total. New investor SNCF Participations SA will buy 6.56 million shares at C$6.10 apiece for C$40 million. Caisse de dépôt et placement du Québec will take 1.71 million shares at C$5.85 per share for C$10 million. Student Transportation stock (TSX: STB) closed unchanged at C$5.80 on Tuesday.

Following the placement, SNCF will hold 16.4% of Student Transportation's outstanding shares, while Caisse will control 18.3%.

SNCF will also have the right to nominate a representative on Student Transportation's board as long as it holds at least 10% of Student Transportation's stock. SNCF's public transport division director, Jean-Pierre Farandou, has been nominated to join Student Transportation's board, which will be expanded to eight members.

Student Transportation, a Toronto-based operator of school buses in North America, said proceeds will be used to fund future growth opportunities, including acquisitions, new contract bids and conversions, and to repay amounts outstanding under its growth credit facility.

"We are delighted to have SNCF P make this substantial investment in STA and are excited to have Jean-Pierre join our board," Student Transportation chairman and chief executive said in a statement. "We have great respect for the business that SNCF has built around the world in transportation. We are also very pleased that the Caisse de dépôt continues to demonstrate confidence and commitment to STA by increasing its investment. The Caisse first invested in STA while we were a private company and then again on our initial public offering in December 2004, and their continuing support is greatly valued."

Student Transportation investor relations director Keith Engelbert told Prospect News: "This was a fairly new investment for us. SNCF brings a lot to the table in the overall transportation logistics business. Clearly, on the transportation side, Jean-Pierre Farandou will be joining us, the board member that will be appointed to the STA board. We hope and we presume ... that their expertise over in France, not necessarily in terms of school buses, but in terms of rail, where everything runs very smoothly there, will be useful for us."

Engelbert said the company was very pleased with where the deal, which had been in the works for months or longer, eventually priced.

"I guess the Caisse bought in at one price, which was market price, and SNCF actually paid a premium," Engelbert said. "Generally when we do raise money, as we have in the past - my CFO likes to say that we're serial issuers - generally those deals usually get done at market or below, so for SNCF to pay a premium, we're very happy about that."

Guardian to place stock

Guardian Exploration Inc. said it plans to sell C$3 million worth of common stock through a private placement.

The deal will involve common shares priced at C$0.30 each as well as 3.38 million flow-through shares at C$0.35 apiece. Guardian common stock (TSX: GX) finished unchanged at C$0.28 on Tuesday.

Blackmont Capital Inc. is the agent.

Guardian, a Calgary, Alta.-based developer of resource properties, said the proceeds of the deal will be used to fund drilling projects.

© 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.