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It’s not standard but it is generally the norm when an acquisition doesn’t close.
We are referring to events at Madalena Energy, a TSX-Venture listed company, which announced Monday that due to “prevailing market conditions,” it has elected not to proceed with the purchase of an additional 10 % working curiosity about the Coiron Amargo block in Argentina and the related marketed public offering of common shares that was announced about fourteen days earlier. Put it right down to insufficient demand from investors at the “right” price.
On March 1, Madalena said that it planned to raise as much as $27 million via a marketed offering for which it termed a “strategic” acquisition. That financing might have required the sale of plenty of shares since company’s stock price at that time was $0.26.
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If the deal had proceeded then Madalena might have ended up with a 45 percent stake within the Coiron Amargo bloc. Buying the 10 per cent stake might have cost Madalena US$8 million. The rest of the proceeds were earmarked for capital expenditure and issue expenses.
The planned offering had a cast of characters: with RBC Capital Markets and TD Securities Inc. being the co-leads lead with five others (Haywood Securities Inc., Industrial Alliance Securities Inc., CIBC Capital Markets, Dundee Securities Ltd. and Mackie Research Capital Corporation) serving as agents.
The market seemed to take the news in its stride: on bigger than normal volume the stock rose by 17 per cent Monday afternoon to 24 cents.
Madalena last raised equity in July 2014 when it scooped up $57.5 million in the sale of shares costing $0.51. That transaction, on which Dundee Securities was the lead manager, was done using a bought deal.
