Mount Gibson gets A$66 million lifeline; GTC to sell convertibles; Lihua, Potash One complete deals

By Kenneth Lim

Boston, Nov. 3 - Mount Gibson Iron Ltd. will raise A$66 million from a party related to a major shareholder as the company announced plans to provide liquidity amid a rash of defaulting customers.

GTC Biotherapeutics, Inc. plans to place $15 million of convertibles with a strategic partner as it seeks to meet milestones on a key developmental product.

Meanwhile, Lihua International, Inc. wrapped up its $15 million private placement of convertible preferred stock.

Potash One Inc. closed an upsized C$10.38 million non-brokered flow-through stock placement as the company welcomed the financing despite tough market conditions.

Mount Gibson raises capital

Mount Gibson Iron announced a A$66 million private stock placement as part of a larger plan to address its liquidity needs amid a slump in demand for its iron production.

The company is selling 110 million ordinary shares at A$0.60 apiece to Shougang Concord International Enterprises Co. Ltd. Mount Gibson common stock (ASX: MGX) eased 1.27% or A$0.005 Monday to close at A$0.39.

Shougang Concord is a wholly owned subsidiary of Shougang Corp., which controls about 18.95% of APAC Resources Ltd., a major shareholder of Mount Gibson.

APAC and Shougang Concord will also underwrite a Mount Gibson 1-for-5 renounceable rights issue at A$0.60 per share to raise up to A$96.5 million and commit to buy available production from Mount Gibson's operations from November 2008 onwards.

As part of the deals, Shougang Concord and APAC will each nominate a non-executive director to Mount Gibson's board. APAC's nominee will be in addition to one that the investor already has.

The proceeds of the various financings will be used to ensure that Mount Gibson is adequately funded to continue priority development activities and mitigate the impact of near-term volatility in the iron ore and financial markets.

Based in Sydney, Australia, Mount Gibson is an iron exploration company.

Mount Gibson said in a press release that a number of customers had requested delays to iron ore shipments scheduled for the fourth quarter of 2008. Three of those customers had defaulted on binding offtake agreements, while two more had reached an agreement with the company, and a sixth was in negotiations.

"We are very disappointed that a number of our customers have defaulted on their binding obligations given the substantial investment Mount Gibson has made in the business based on executed legally binding long term ore purchase contracts and further representations made by these customers," Mount Gibson chairman Neil Hamilton said in a statement.

"Having said that, we acknowledge the support of our major shareholder, APAC, and Shougang Concord during this difficult time which allows Mount Gibson the opportunity to present a viable solution to shareholders that provides long term security for their company during the current volatility in the iron ore and financial markets."

GTC to raise $15 million

GTC plans to place $15 million of 8% convertible subordinated secured notes due June 20, 2012 with strategic partner LFB Biotechnologies.

The notes will have an initial conversion price of $0.31 per share. GTC common stock (Nasdaq: GTCB) closed at $0.24 Monday, lower by 40% or $0.16.

LFB, which entered into a strategic partnership with GTC early October, will also receive five-year warrants for about 23.2 million common shares at $0.31 per share.

The notes will be secured by a first lien on GTC's intellectual property, a second lien on other GTC assets and a grant of rights and licenses. The convertibles will be subordinated to an outstanding term loan from GE Capital.

Proceeds will fund the company's corporate purposes.

Framingham, Mass.-based GTC develops and produces human therapeutic proteins through transgenic technology. Its key product is ATryn, a recombinant human antithrombin that has been approved for use in Europe and is beginning the review process in the United States.

"Our collaborative relationship with LFB is one of GTC's most important strategic relationships as we navigate these difficult financial markets," GTC chief executive and chairman Geoffrey F. Cox said in a statement. "This financing will enable GTC to complete the significant regulatory and partnering milestones for ATryn in the US in the first quarter of 2009. In addition, we will continue to pursue our overall strategy of developing collaborative strategic partnerships across the full range of our development pipeline."

Lihua wraps convertible deal

Lihua International said it completed a $15 million private placement of series A convertible preferred stock following the completion of a reverse merger transaction.

The company sold about 6.82 million convertible preferreds. Investors also received warrants for 1.5 million common shares. Lihua's common stock is not currently trading.

The placement was carried out immediately after Lihua completed a reverse merger with Magnify Wealth Enterprise Ltd. to assume ownership of Ally Profit Investments Ltd. Ally Profit is a holding company whose subsidiaries, Danyang Lihua Electron Co., Ltd. and Jiangsu Lihua Copper Industry Co. Ltd. are copper wire manufacturers.

Lihua Electron chief executive Zhu Jian Hua became chief executive and chairman of Lihua following the transactions.

Proceeds will be used to increase the number of Lihua Electron's production lines and to fund Lihua Copper.

Based in Danyang, China, Lihua was previously a shell company with no operations.

"This is an important milestone for our employees and for the people of Danyang as Lihua Electron and Lihua Copper are acquired by a U.S. public company and raise their first capital from outside investors," Zhu said in a statement.

Potash One upsizes deal

Potash One raised C$10.38 million in its recent non-brokered private stock placement, more than the C$10 million that it originally planned.

The company sold 8.3 million flow-through common shares at C$1.25 apiece. Potash One common stock (TSX: KCL) closed at C$0.95 on Monday, up by 5.56% or $C0.05.

Proceeds will be used for exploration.

Vancouver, B.C.-based Potash One is a potash company engaged in the identification, acquisition, exploration and development of advanced resource properties.

"We are very pleased that despite the difficult world credit conditions, there continues to be a strong interest in the company," Potash One president and chief executive Paul F. Matysek said in a press release. "These funds provide us with a working capital position of over $27 million dollars and will be used to advance the Legacy Project to bankable feasibility."

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