Atlas scraps $24.76 million placement; Quaterra raises enough for year; Neo lands Hong Kong investor

By Kenneth Lim

Boston, April 18 - Atlas Energy Resources, LLC called off a planned $24.756 million private stock placement as it disclosed a substantial loss from its hedge positions.

Meanwhile, Quaterra Resources Inc. said its $11.14 million non-brokered private placement of units will last it into next year.

Neo Material Technologies Inc. said it raised C$10 million from a private placement of stock to a Hong Kong-based fund.

Atlas cancels placement

Atlas Energy said Friday that it is canceling a planned $24.756 million private placement and a public stock offering following the disclosure of substantial losses from its hedge positions.

Atlas Energy said it expects to recognize a net loss of about $112 million in its accumulated other comprehensive loss as of March 31, compared with a net loss of $5 million as of Dec. 31.

"The recognition of these incremental hedge liabilities are the result of recent increases in reference prices for natural gas and oil," Atlas Energy said in a statement.

The company said it decided to scrap the stock offerings "to allow investors sufficient time to become aware" of the losses.

Atlas Energy had planned to issue 600,000 shares of its common stock to its parent, Atlas America Inc., at $41.26 per share. That price was Atlas Energy's closing stock price on Thursday. Atlas Energy common stock (NYSE: ATN) closed at $39.33 on Friday, lower by 4.68%, or $1.93.

Atlas Energy also called off its public offering of 1.6 million common shares. UBS Investment Bank and Wachovia Securities were the bookrunners of the public offering.

Proceeds of the stock sales were to be used for repaying Atlas Energy's outstanding debt under an $850 million senior secured revolving credit facility, to create additional borrowing capacity for acreage acquisitions and to develop its properties.

Atlas Energy is a Moon Township, Pa.-based producer of natural gas on domestic properties.

"The rapid increase in natural gas prices during the first quarter of 2008 was generally favorable to us, since our sale of unhedged production was at a higher price than anticipated," Atlas Energy chief financial officer Matt Jones said in a statement. "On hedged production, by far the majority of our output, we will receive exactly the price anticipated at the time our hedges were placed. However, for accounting purposes, the anticipated difference for future periods between hedged prices and the March 31st spot price resulted in the non-cash balance sheet adjustment described above."

A source close to Atlas Energy told Prospect News that the company remains interested in raising capital.

"But at this stage we don't know when, how and how much," the source said.

Quaterra Resources closes placement

Quaterra Resources said it completed a downsized $11.14 million non-brokered private placement of units.

The deal originally priced March 24 for $12.8 million.

Quaterra sold 3.48 million units at $3.20 apiece. It had planned to sell 4 million units. Each unit consists of one common share and a half-share warrant. Each whole warrant is exercisable at $4.20 for 18 months.

Quaterra common stock (AMEX: QMM) closed at $3.21 on the American Stock Exchange on Friday, lower by 5.03%, or $0.17. Its Toronto-listed stock (TSX: QTA) was lower by 4.41%, or C$0.15, at C$3.25 at the end of the day.

The warrants may expire sooner if Quaterra's shares close at $5.50 or higher for 15 consecutive trading days. If that happens, the warrants will expire 30 days after the company notifies holders.

Proceeds will be used to fund exploration and drilling programs and for general corporate purposes.

Based in Vancouver, B.C., Quaterra acquires and explores mineral properties in the Americas.

A company source said the new capital should fund Quaterra's planned drilling and exploration projects for the year in most of its existing properties and for evaluating other opportunities.

Neo Material sells to CEF

Neo Material Technologies said it is raising C$10 million through a private stock placement to Hong Kong-based CEF (Capital Markets) Ltd.

The deal involves 2.38 million common shares at C$4.21 each. Neo Material common stock (TSX: NEM) gained 3.71%, or C$0.17, to close at C$4.75 on Friday.

Based in Toronto, Neo Material Technologies is a producer, processor and developer of neodymium-ironboron powders, rare earths and zirconium-based engineered materials.

The company said it will use the proceeds to repay existing senior debt.

CEF is a Hong Kong-based fund that is jointly owned by Canadian Imperial Bank of Commerce and Cheung Kong (Holdings) Ltd. Cheung Kong is in turn run by Hong Kong tycoon Li Ka-shing.

"Neo has been active in China since its inception 15 years ago and we see a number of strategic growth opportunities there in the coming years," Neo Material president and chief executive Constantine Karayannopoulos said in a statement. "In that regard we welcome CEF as a new shareholder of Neo and we will pursue opportunities to work with CEF and its shareholders."

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