Sino Gas wraps $18.8 million placement; Medivation obtains $100 million equity line

By LLuiva Mares

New York, Aug. 10 - Sino Gas International Holdings, Inc. and its subsidiary Beijing Zhong Ran Wei Ye Gas Co., Ltd. announced Monday they concluded an $18.8 million private placement.

The company sold 8.34 million shares of common stock at $2.25 per share.

The group of investors will be entitled to receive 1.5 million additional shares of the company's stock if the company's after-tax net income for the fiscal year ending Dec. 31, 2008 is less than $11,000,000.

Those shares will be newly issued from treasury at the closing and will be placed in escrow until the end of 2008.

"China is going through a process where they have over the past three years invited private investment into the natural gas distribution business and has created the frame work of laws that allow local governments to have companies bid for the long-term concessions that usually run from 25 to 30 years," said a company spokesperson.

"Within those 25 to 30 years, most small and medium-sized cities will grant the company exclusivity to distribute natural gas to households, industries as well as commercial establishments."

The spokesperson said that in order for the company to be able to sell gas it has to build the infrastructure.

"That means laying out the pipelines and connecting the households to the distribution network and that is expensive, it requires investments up front," he said.

In addition to the private placement, the company will also simplify its capital structure by repurchasing series A, B and D warrants and cancelling the series E and J warrants from their holders, paying their prior investors $3.5 million in cash and issue a warrant for the purchase of 27l, 074 common shares and issue 770,897 shares of the company's B preferred stock.

Sino Gas will pay to the prior investors $3.5 million in cash, issue a warrant for the purchase of 271,074 common shares, and issue 770,897 shares of the company's series B preferred stock or stock with substantially identical terms.

"The gas distribution business all over the world is of fairly safe, low risk business once you get past the process of actually building the network," the spokesperson said. "It becomes a utility company that generates very predictable returns and that's one of the long-term highlights."

Proceeds for the share sale will be used to build distribution networks and connecting industries, households and commercial businesses.

Beijing, China-based Sino Gas specializes in natural gas distribution systems in small and medium size cities in China.

Medivation's $100 million equity line

Medivation, Inc. announced Monday it obtained an equity line of credit facility which will allow it to raise up to $100 million by selling common stock to Azimuth Opportunity Ltd.

The equity line runs for 18 months, ending April 1, 2009.

Flexibility is was what made this specific financial structure appealing to Medivation, said Patrick Machado, the company chief financial officer.

"It allows the company to determine when the draw will be taken down, what the floor price will be and how much to raise at any given point and time," he said. "The facility is for a total of up to $100 million and the way that it works is that there is a formula in the contract that determines the share price for shares that are shown for any given draw. So typically there are multiple draws over the term of the facility."

Machado said a formula factored into the contract sets a market price, depending on where the stock is.

"We can control the timing of capital raises, we can set the minimum price and stipulate the amount we would like to raise," he said. "For companies like ours that have regular data announcements it's always better to be able to raise money in small tranches as data comes in so you raise enough to be able to get you to the next inflection point."

The per-share purchase price for the shares equals the daily volume weighted average price of the common stock on each date during the draw down period on which shares are purchased, less a discount ranging from 3.65% to 5.15%, based on the company's market capitalization.

"Rather than doing a deal for $100 million now, it might be better to do $25 million in the next quarter and another $25 million the following quarter to ride the stock price up and thereby minimizing dilution," said Machado.

Proceeds will be used to fund the company's Phase III Alzheimer's disease trials and for the company's general operations.

San Francisco-based Medivation, Inc. is a biopharmaceutical company that acquires technologies in the late preclinical development phase and develops them cost-effectively.

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