Wednesday, September 2, 2009

Yanked financing at North American Palladium (PAL)

AlphaNinja - Interesting.

Just a couple weeks ago, North American Palladium (PAL), a Toronto-based metals company, announced its plans to raise about $50million in convertible notes. That financing looked expensive, but worse was the amount to be paid to the underwriting investment bank:

Upon closing, the Company will pay the agent a cash fee equal to 3% of the aggregate gross proceeds of the offering and warrants equal to 3.0% of issuable shares.

Maybe shareholders got ahold of management and berated them for giving upside warrants to a middleman, in addition to their 3% commission. Either way, the deal is off the table. Usually these financings are pulled due to lack of investor appetite, but this one appears to be the company (maybe its shareholders) balking at ridiculous terms from an I-bank.

From today's release:

TORONTO, ONTARIO--(Marketwire - 09/02/09) - North American Palladium Ltd. ("NAP" or the "Company") (TSX:PDL - News)(TSX:PDL.WT - News)(AMEX:PAL - News)(AMEX:PAL.WS - News) has elected to withdraw from its previously announced best efforts private placement of up to US$50 million, as the final terms proposed by Casimir Capital L.P., the agents for the financing, were not satisfactory.

"NAP remains financially strong with a cash position of $60 million as at June 30, 2009 and no long term debt," said William J. Biggar, President and Chief Executive Officer. "In addition to our strong balance sheet, we expect positive cash flow from the anticipated restart of the Sleeping Giant mine in the fourth quarter of this year. Although we have the ability to raise additional funds to support our growth initiatives, we will be disciplined and only execute on terms that are attractive to our Company."

NAP remains on track to meeting its core business objectives of 2009. In addition to the anticipated restart of the Sleeping Giant gold mine, the Company continues to be encouraged by the preliminary results of its ongoing exploration program at its Lac des Iles palladium mine.

The positive tone of this release begs the question, why were you about to raise expensive $$$ in this fashion if it wasn't necessary? That's a strike against management.

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