National City to sell $7 billion of stock, convertible preferreds; Coal of Africa digs up £66.6 million

By Laura Lutz

Des Moines, April 21 - National City Corp. led Monday's PIPE news with a $7 billion private placement of convertible preferreds and common shares.

Though no others approached that size, several other large private placements showed up around the globe, including deals sized at £66.6 million for Coal of Africa Ltd., C$100 million for Africo Resources Ltd. and $80 million for Blue Coat System, Inc.

National City secures $7 billion

National City's offering will consist of $6.37 billion of contingently convertible, perpetual non-cumulative preferred stock and $631 million of common stock.

Corsair Capital will invest $985 million. National City said the other investors include several of its largest current institutional stockholders.

The company will sell 63,690 series G contingent convertible perpetual non-cumulative preferred shares at $100,000 per share for $6.37 billion.

After receipt of certain approvals, each preferred will automatically convert into 20,000 common shares, subject to adjustment.

The common stock portion will consist of 126.2 million common shares at $5.00 apiece.

In addition, Corsair Capital and certain other investors will receive five-year warrants exercisable for common stock.

Those warrants will have an exercise price equal to 115% of the average closing price of the company's common shares for the five-trading-day period beginning April 21, with a cap of $8.50 per share.

National City is a Cleveland-based financial holding company with banking networks in Ohio, Florida, Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania and Wisconsin.

"This strategic raising of equity capital provides National City with the financial flexibility to continue investing in and growing our core businesses, which are delivering solid results, while addressing the asset quality challenges posed by the disruptions in the credit and housing markets, National City chairman, president and chief executive officer Peter E. Raskind said in a news release.

"We are pleased with the confidence that our investors have expressed in the value underlying National City's franchise and the fundamental strengths of our business model that will help drive a return to profitability," Raskin added.

"Corsair Capital's participation is particularly gratifying. It is a seasoned investor with a record of working productively with the boards and management teams of the companies in which it invests," he said.

National City said its board plans to appoint Corsair vice chairman Richard E. Thornburgh as a director.

"In Corsair's view, National City is an integral contributor to the economic fabric of the markets it serves. Our decision to make a long-term investment in National City reflects our recognition of the company's important role as a leading provider of core banking services to its many customers, and our confidence in the potential of National City to achieve enhanced value for its customers, stockholders and employees in the future," Thornburg said in the same news release.

Also on Monday, National City released its first quarter 2008 results, which included a net loss of $171 million, or 27 cents per diluted share, compared to a net loss of $333 million, or 53 cents per diluted share, in the fourth quarter of 2007.

In the end, the company's stock fell $2.30, or 27.61%, on Monday to close at $6.03 before losing another 3 cents in after-hours trading (NYSE: NCC).

Coal of Africa arranges share sale

Coal of Africa plans to sell 60 million ordinary shares at 111p apiece to ArcelorMittal, for total proceeds of £66.6 million.

Formerly known as GVM Metals Ltd., Coal of Africa is a coal developer with headquarters in Woodmead, South Africa.

The placement was part of a coal off-take agreement between Coal of Africa and ArcelorMittal, a steel company.

Following the deal, ArcelorMittal will own up to 20% of Coal of Africa.

"This is the most significant event in CoAL's [Coal of Africa's] short history operating within the coal industry. We are very glad to welcome ArcelorMittal as a significant shareholder and first customer which reinforces CoAL's status as an emerging mid-tier coal producer," managing director Simon Farrell said in a news release.

The company's shares fell 9.5p, or 6.81%, to close at 130p on Monday (London: CZA).

Africo to raise C$100 million

Africo Resources said Camrose Resources Ltd. has agreed to buy C$100 million of units of Africo at C$2.50 apiece.

Each unit will consist of one share and one half-share warrant, with each warrant exercisable for 18 months at C$3.50.

At the same time, Camrose loaned C$2 million to Africo. That loan will mature when the unit placement is completed, when the placement is terminated or on Aug. 31, whichever is earliest.

The loan bears interest at Libor plus 200 basis points.

If the unit placement is completed, the entire loan amount will be set off against the total subscription price payable to Africo.

Completion of the private placement will result in Camrose owning about 63% of the outstanding share capital of Africo.

Vancouver, B.C.-based Africo Resources is a development stage copper-cobalt company with an operational base in the Democratic Republic of the Congo.

The deal between Africo and Camrose is also expected to include acquisitions of properties owned by Camrose or its affiliates.

"The private placement with Camrose will provide Africo with the equity funding required to advance the Kalukundi project," Its president and chief executive officer, Tony Harwood, said in a news release. "

Africo's shares lost C$0.25, or 10%, to finish Monday at C$2.25 (Toronto: ARL)

Blue Coat to sell convertibles

Blue Coat said it has arranged an $80 million private placement of zero-coupon convertible notes with Francisco Partners II, LP and an affiliate of Elliott Associates, LP.

The notes will mature in 2013.

They are convertible into common shares at an initial conversion price of $20.76, which represents a 5% conversion premium based on the closing price of Blue Coat's common stock of $19.77 per share on April 18.

Francisco and Elliott also will receive warrants for 385,000 shares, exercisable at $20.76.

Based in Sunnyvale, Calif., Blue Coat is a web communications company.

It said it will use the proceeds to partially fund its planned acquisition of Packeteer, Inc. The placement is conditional upon the closing of the Packeteer transaction.

The investment by Francisco Partners and Elliott Associates enables us to make a valuable investment to further our strategic objectives," Brian NeSmith, president and chief executive officer of Blue Coat said in a news release. "Adding Packeteer technology, expertise, channel partners and customer base will give us a competitive advantage that will help drive future business."

Francisco and Elliott also expressed satisfaction with the deal.

"We are pleased to join with Elliott Associates to facilitate Blue Coat's acquisition of Packeteer," Keith Geeslin, managing director of Francisco said in the same release. "We believe this acquisition will give Blue Coat a decisive advantage in the evolving market for WAN optimization."

Blue Coat's stock gained 48 cents, or 2.43%, to close at $20.25 on Monday before falling back 43 cents in after-hours trading (Nasdaq: BCSI).

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