Sulliden says fundraiser important amid legal battle; Anthracite, TransAtlantic find major buyers of stock

By Kenneth Lim

Boston, March 31 - Sulliden Exploration Inc. said its C$2.25 million fundraiser will provide it with important capital until the end of the year.

Meanwhile, Anthracite Capital Inc. said it is selling convertible preferred stock and common stock to a fund in a private deal.

TransAtlantic Petroleum Corp. entered into a C$12 million non-brokered deal that involves a stock sale and an addition to its board of directors.

Sulliden props up capital

Sulliden Exploration said it is selling C$2.25 million of units to a private investor and insiders and may raise a further C$2.2 million to C$2.7 million through a public rights offering.

Sulliden said it will sell 5,714,286 units of one share and one warrant at C$0.35 per unit to Toronto-listed investment firm Aberdeen International Inc. and Aberdeen executive chairman Stan Bharti. Each warrant will be exercisable at C$0.45 for two years.

Another 715,000 shares will be sold to certain insiders and other parties at the same price.

Sulliden common stock (TSX: SUE) closed at C$0.315 on Monday, up by 8.62%, or C$0.025.

The warrants may expire sooner if Sulliden's shares close at C$0.75 or higher for 20 consecutive trading days. In that case, the warrants will expire 40 days after the company notifies holders.

Sulliden will also begin a one-for-10 rights issue to all shareholders, including Aberdeen and Bharti, after the private placements are settled.

Sulliden, a mineral exploration company based in Montreal, said the proceeds will be used for exploration, to fund its ongoing court battle over ownership of its Peruvian Shahuindo property and for working capital.

As part of the deal, Aberdeen corporate development vice president Scott Moore will join Sulliden's board.

"We welcome the investment from Aberdeen and Stan Bharti with their extensive industry experience, particularly in South America, and we also look forward to the contribution of Scott Moore as a director of Sulliden," Sulliden president and chief executive officer John Kearney said in a press release. "This transaction represents a strong endorsement of the value and potential of our core Shahuindo property."

The Shahuindo property dispute continues to be a thorn in Sulliden's side.

"Our biggest issue is we've been embroiled the last three years in a legal dispute over ownership of our property, and it's right now going to the Supreme Court of Peru and we expect a court date in May and we think that decision will have a significant impact," Sulliden vice president and chief financial officer Craig Geier told Prospect News.

"We went through an arbitration process, and the other respondent argued that the arbitration wasn't valid, so that's what's going to the Supreme Court," Geier explained. "If we win, we will be in a very strong position, we feel."

Geier said there has also always been a chance that the lawsuit over the Peruvian property could also be settled.

The Shahuindo property has some minor production in place, but a timeline for full-scale production has been hampered by the legal battle, Geier said.

"We can only get a clear picture once the ruling comes sometime in July," he said. In the meantime, Sulliden is focusing on exploration.

The legal uncertainty has also weighed on the company's stock price, Geier said.

"In the context of where the market is at right now, we've been bouncing all over," Geier said. "Obviously we'd have been happier with higher prices, but obviously the market at the end of the day is always the master, so you've got to do it in the context of where you are."

The new capital will probably last the company for the rest of the year, Geier said.

"For any exploration company, raising capital is probably job one," Geier said. "We got drilling programs and we got ongoing legal fees with our project in Peru, and so you know the necessity of raising capital. As of our latest statement we had just over C$1 million in the bank. ... Based on the way our spending to date and money in the bank, we are good through the end of the year [with C$2.25 million]."

The new addition of Aberdeen to the picture is a welcome development, Geier said.

"Aberdeen has got a fairly significant track record as an investor focused solely on the exploration market and so we take the investment from them as a validation of the value of our properties and confidence," Geier said.

Aberdeen, which was already familiar with Kearney through Labrador Iron Mines Holdings Ltd. in Canada, first approached Sulliden about the investment, Geier said.

"It's a fairly small market as you probably know," he said. "Those in the market know us. Aberdeen was a fairly significant investor in Labrador, and that was led by John Kearney, and so I think there was also a lot of faith and trust in some of the individuals in the company. It became a relatively easy thing to do."

Sulliden's concern during the fundraising was not just to get more capital but to also ensure that existing shareholders would have a chance to take part, Geier said.

"Our balancing was always that while we wanted to raise capital, and while we're happy with Aberdeen as an investor, that was balanced by the feeling that we should allow the existing shareholders to participate," Geier said. "And obviously getting all your shareholders to participate is difficult, and so therefore we had to have a rights issue. Exploration companies are fairly difficult to debt finance, and we had a number of options in terms of equity financing, but we thought overall this position that we arrived at was the best."

Anthracite to raise $93.5 million

Anthracite Capital said it plans to raise $93.5 million from a private placement of preferred and common stock.

The company will sell $23.4 million of common stock at $6.69 per share and $70.1 million of cumulative redeemable convertible preferred stock to a DLJ Real Estate Capital Partners fund.

The preferred stock is convertible into common shares at a conversion price of $7.49 per share, a 12% premium to the closing price of the company's common stock on Friday, $6.69. The shares pay 12% dividends.

Anthracite common stock (NYSE: AHR) closed at $6.60 on Monday, down by 1.35%, or $0.09.

Anthracite is a New York-based real estate investment trust focused on investments in high yield commercial real estate loans and related securities. It is a subsidiary of New York-based BlackRock, Inc. It did not say how it will use the proceeds of the deal.

TransAtlantic sells to Riata

TransAtlantic Petroleum said it is selling C$12 million worth of common shares in a non-brokered private placement.

The deal involves 35 million common shares that will be sold to Riata Management LLC in two tranches.

The first tranche will consist of 10 million shares at C$0.30 per share for C$3 million, while the second tranche comprises 25 million shares at C$0.36 apiece for C$9 million.

TransAtlantic stock (TSX: TNP) increased 7.41%, or C$0.02, on Monday to close at C$0.29.

TransAtlantic, a Calgary, Alta.-based oil and natural gas exploration company, said proceeds will be used to fund drilling activities in Romania, to repay debt and for general corporate purposes.

As part of the deal, Riata unit Longfellow Energy LP head Malone Mitchell III will join the board of TransAtlantic. If the second tranche is completed, Riata will nominate a second director to TransAtlantic's board.

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