It’s not the norm but it is generally the norm when an acquisition doesn’t close.
We are talking about events at Madalena Energy, a TSX-Venture listed company, which announced Monday that because of “prevailing market conditions,” it has elected not to proceed with the acquisition of an additional 10 per cent working curiosity about the Coiron Amargo block in Argentina and also the related marketed public offering of common shares which was announced about two weeks earlier. Put it down to insufficient demand from investors in the “right” price.
On March 1, Madalena asserted it planned to raise up to $27 million via a marketed offering for what it termed a “strategic” acquisition. That financing might have required the sale of plenty of shares since company’s stock price at the time was $0.26.
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If the deal had proceeded then Madalena might have ended up with a 45 per cent stake in 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. to be 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) acting as agents.
The market seemed to take the news in its stride: on bigger than normal volume the stock rose by 17 percent Monday afternoon to 24 cents.
Madalena last raised equity in July 2014 when it scooped up $57.5 million from the sale of shares priced at $0.51. That transaction, which Dundee Securities was the lead manager, was done by way of a bought deal.
