Valad sets A$200 million private placement; Sydney Gas issues shares at lower-than-expected price

By Sara Rosenberg

New York, Feb. 5 - In the largest PIPE deal of the day, Valad Property Group announced a A$200 million private placement of a convertible note as part of a strategic alliance with Kimco Realty Corp. that is intended to develop the companies' real estate businesses by leveraging the complementary distribution networks of both groups.

Also on Tuesday, Sydney Gas Ltd. announced that it wrapped a private placement but at a lower issue price than previously anticipated.

Valad Property Group raised A$200 million from a private placement of a five-year convertible note to Kimco Realty.

The note has a 9.5% coupon and is convertible into Valad stapled securities at a price of A$1.33 apiece at any time.

The conversion price represents a 20% premium to the adjusted five-day volume weighted average price of A$1.11. The volume weighted average price for 2008 to date is A$1.13.

Valad has two extension options - one for six months and one for 12 months - for a total extension option of 18 months.

If the note is extended, it will carry a coupon of 10.5% during the six month extension option, and a coupon of the greater of 12% or one-year swap rate plus 500 basis points during the 12 month extension option.

"This is a unique and powerful partnership. Kimco is one of the most well respected REITs internationally and has a complementary culture and operating structure to Valad. We have known Dave Henry (Kimco vice chairman and chief investment officer) for over a decade, and with Dave and Milton Cooper (Kimco chairman and CEO) at the helm we are very confident of the benefits this alliance will bring," said Stephen Day, Valad's executive chairman, in a company news release.

"Valad's funds management business has traditionally targeted Asia Pacific and European wholesale investors. The U.S. and Canadian investor market is currently untapped by Valad and represents an exciting opportunity for us. The alliance will provide Valad with access to prominent U.S. institutional investors with whom Kimco has established relationships. This will help open the door for us to market our European and Asia Pacific products to North American investors," Day continued.

"In addition to the strategic benefits of this deal, our strengthened balance sheet position represents prudent capital management in light of current volatility in debt and equity markets worldwide. This raising enables us to repay virtually all debt which expires in the next 12 months which we believe is sound practice. We have the acquisition fire power to pursue a number of high ROE (return on equity) transactions including co-investment in our funds and taking advantage of countercyclical market opportunities such as those being targeted by our A$1.1 billion U.K. Opportunity Fund. Our view is that well-capitalized groups which have the capacity to act will reap the benefits presented in volatile markets," Day added in the release.

The company's stock closed unchanged at $1.00 (ASX: VPG).

Valad is a Sydney, Australia-based company that combines a property trust and a funds management company.

Sydney Gas gets A$17.85 million

Sydney Gas revealed that it raised A$17.85 million by issuing approximately 52.5 million shares at A$0.34 apiece to A J Lucas Group Ltd.

Proceeds will be used for exploration and development.

The issue was a component of the arrangements with Lucas announced on Jan. 14.

However, the issue price is less than the A$0.38 announced on Jan. 14, a change the company said acknowledged the early receipt of funds in a period of increased market uncertainty, the recent trading prices of the company's shares and benefits expected under a technical services agreement and drilling services agreement which are being finalized.

As previously announced, Sydney Gas and AJ Lucas Operations Pty Ltd. are expected to enter into a technical services agreement and a drilling services agreement, which will oblige Lucas to make available drilling and technical resources as required by Sydney Gas.

The resources include, but are not limited to, two fully manned rigs for a period of up to two years, experienced drilling personnel to operate the rigs, and specialist coal seam gas expertise to assist in evaluating and developing the gas assets.

"We welcome the opportunity to work with A J Lucas and this additional capital will allow Sydney Gas to accelerate its exploration programs and the development of its coal seam gas assets," said Dr John Saunders, chairman, in a company news release.

"The Hunter Gas Exploration is the current focus of activity and will be progressed taking fully into account technical, environmental and social benefit cost considerations," Saunders added.

The company's stock closed unchanged at $0.30 (ASX: SGL).

Sydney Gas is a Sydney, Australia-based coal seam gas developer.

Detour Gold plans C$65.2 million deal

Detour Gold Corp. has entered into an agreement with a syndicate of underwriters led by BMO Capital Markets for a C$65.2 million private placement of special warrants.

The company will sell 4 million special warrants at C$16.30 apiece. Each warrant is convertible into common shares at no additional cost.

Proceeds of the offering will be used mainly to advance the exploration and development of the company's Detour Lake project in Ontario.

Settlement is expected on Feb. 21.

According to a company spokesman, the private placement is being done because the company has a busy year ahead of itself in terms of, amongst other things, drilling and "you don't wait until you have no more money to finance."

"When you have a bought deal offered to you, it's very hard to refuse," the company spokesman said. "Got a bought deal in a very tough market, which shows the strength of our company and our asset."

The company's stock closed at $16.30, down $0.85, or 4.96% (Toronto: DGC).

Detour Gold is a Toronto-based mineral exploration company.

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