Kennedy-Wilson cements ties with $100 million investor; Magellan seeks funding for acquisition

By Devika Patel

Knoxville, Tenn., May 19 - Wednesday saw few private placements, but deal sizes were particularly large.

Kennedy-Wilson Holdings, Inc. said after the close Tuesday that it plans to sell $100 million of its convertible preferred stock to Fairfax Financial Holdings Ltd. in a private placement. The company said the strategic relationship created by this deal was the "single greatest event in Kennedy Wilson's history thus far."

Magellan Petroleum Corp. announced a $15.6 million stock placement after Tuesday's close as well. The oil and gas company needs the financing in order to buy a 40% interest in the Evans Shoal field in offshore Australia

Neostem, Inc. disclosed that it will sell $20 million of its shares to Commerce Court Small Cap Value Fund, Ltd. under a two-year equity financing agreement.

Kennedy-Wilson sells $100 million

Kennedy-Wilson, a real estate services and investment firm based in Beverly Hills, Calif., announced a $100 million private placement of 6% convertible preferreds with Fairfax Financial, a Toronto-based company with a total investment portfolio valued at approximately $20 billion.

"This is the single greatest event in Kennedy Wilson's history thus far," chairman and chief executive officer William McMorrow said in a press release. "We feel very fortunate to begin this relationship with ... the extremely talented Fairfax team. Not only does Fairfax bring an extremely strong balance sheet and investing track record but, more importantly, our companies share the same long-term, value investing philosophies and were both built from the ground up."

"With our long-term focus and value investing philosophy, we believe that this is the right time for Fairfax to begin selectively participating in commercial real estate opportunities, particularly in California, with the highly talented team at Kennedy Wilson," the investor's chairman and chief executive Prem Watsa said.

The preferreds are initially convertible into common shares at $12.41. They are subject to mandatory conversion by May 2015.

Company shares (NYSE: KW) rose 2.79%, or 31 cents, closing at $11.42 Wednesday.

Magellan plans $15.6 million

Magellan Petroleum said Young Energy Prize SA will buy 5.2 million common shares at $3.00 per share, which is approximately 71% above the closing price of the stock on May 17.

Currently, Young Energy owns approximately 27% of the company's outstanding shares. The $15.6 million financing would result in the investor owning approximately 33% of the company's stock.

"[Young Energy] continues to believe in Magellan's business models and, based on recent key progress, wishes to invest further in Magellan," Young Energy's chairman and chief executive officer Nikolay V. Bogachev stated.

Magellan announced on April 16 that it plans to acquire a 40% interest in the Evans Shoal natural gas field, in the Bonaparte Basin off the coast of Northern Australia, from Santos Ltd. for A$100 million. The deal is expected to settle in the second half of 2010.

"This [financing] is the first step in the financing process for the purchase of a 40% interest in the Evans Shoal field, offshore Australia," president and chief executive officer William H. Hastings said in a press release. "We are working other, parallel initiatives which, when complete, will yield major new investment in the company. We expect to use the majority of equity funding for the purchase of the field interest and the planning, testing, analysis and drilling of Evans Shoal ... A portion of the proceeds will go towards project development in addition to proceeds from other parallel initiatives."

The Hartford, Conn., company shares (Nasdaq: MPET) jumped 6.79% Wednesday, or 11 cents, closing at $1.73.

Neostem negotiates $20 million

New York-based Neostem reported it has secured a $20 million two-year equity financing agreement through Commerce Court, under which it may sell shares in tranches of up to 2.5% of its market capitalization during the pricing period.

The shares will be sold at a purchase price equal to 95% of the volume-weighted average price of the company's common stock during the pricing period.

The company collects, processes and stores adult stem cells for autologous use in the treatment of cardiac disease, autoimmune disorders and other conditions. Its shares (Amex: NBS) fell 4.75%, or 15 cents, to close at $3.01 on Wednesday.

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