Hartford Financial raises $2.5 billion; Altair receives $10 million; ADA-ES gets $16.87 in joint venture

By Kenneth Lim

Boston, Oct. 6 - Hartford Financial Services Group, Inc. raised $2.5 billion in mezzanine financing from Allianz SE.

Also in PIPEs news, Altair Nanotechnologies Inc. received $10 million through a strategic stock placement to existing investor Al Yousuf LLC.

ADA-ES, Inc. said it sold $16.87 million of convertible preferreds to Energy Capital Partners I, LP.

Hartford raises $2.5 billion

Hartford Financial said it will issue $1.75 billion of 10% junior subordinated debentures due 2068 and $750 million of convertible preferred stock to Allianz.

The preferreds, which were sold at $31 apiece, will be convertible into Hartford common stock at $31 per common share.

Hartford common stock (NYSE: HIG) closed up 12.77% or $3.50 at $30.90.

Allianz also will receive warrants for about 69.12 million common shares. The warrants are exercisable at $25.32 for seven years.

Hartford is a diversified insurance and financial services company based in Hartford, Conn.

The company announced Monday that it was cutting its quarterly common dividend to $0.32 per share.

Hartford also said it expects a net loss for the third quarter in the range of $8.50 to $8.80 per share, largely due to losses on its investment portfolio in the financial services sector.

"We are pleased that Allianz, one of the world's leading insurers and financial services providers, will make such a significant investment in the Hartford," Ramani Ayer, Hartford's chairman and chief executive, said in a statement. "We are taking decisive action to ensure that the Hartford remains well capitalized for long-term success. This investment strengthens our ability to weather volatile markets and continue to invest and vigorously compete in our businesses. We are dedicated to honoring our commitments to customers."

"With this investment by Allianz SE, we project that we will finish the year with a capital margin of about $3.5 billion in excess of our modeled rating agency requirements to maintain AA level ratings," Ayer said.

Allianz chairman and chief executive Michael Diekmann stated: "We believe in the fundamental strength of the U.S. economy and its insurance industry and respect The Hartford as a great insurance brand. We anticipate a favorable return on our investment."

A sellside equity analyst told Prospect News that the investment boosted confidence that Hartford would be able to avoid liquidity problems.

"Normally when a company provides a loss guidance and cuts its dividend, it's going to be bad for the stock," the analyst said. "I think what's happening here is people were more worried about them not having enough capital, so this helped to reassure some investors. There's also some speculation about Hartford getting acquired, and that may be supporting the stock, although I think it's kind of a risk, because it's hard to know what kind of consideration an acquirer would offer, especially if the company could have liquidity issues."

Altair investor raises stake

Altair said it placed $10 million of its common stock at $1.70 apiece to existing investor Al Yousuf LLC.

Altair common stock (Nasdaq: ALTI) closed at $1.75 on Monday, lower by $0.46 or 20.81%. The placement comprised about 5.88 million shares.

The company also issued about 2.12 million shares to Al Yousuf in exchange for a release of potential breach of contract and other claims related to $40 million investment by Al Yousuf in November 2007.

Al Yousuf will also receive two seats on Altair's board of directors.

Proceeds will be used to support manufacturing growth, working capital and general corporate purposes.

Altair, based in Reno, Nev., is a ceramic nano-materials supplier.

Al Yousuf is a Dubai-based conglomerate.

"This investment demonstrates a deepening of our strategic relationship with Al Yousuf and a strong validation of the confidence we both share in Altair's power and energy technologies," Altair chief executive Terry M. Copeland said in a statement.

"As Altair's recent outstanding independent testing results confirm, we continue to see the tremendous global growth opportunity for the company's innovative battery technology in both the transportation and stationary power markets," Al Yousuf president Eqbal Al Yousuf also stated. "We are excited about the opportunity to expand our relationship with Altair and look forward to helping the company bring its powerful energy solutions to market."

ADA-ES receives $16.87 million

ADA-ES said it placed $16.87 million of 4% series A convertible preferred stock with Energy Capital Partners as part of a joint venture project.

The deal involves 1.8 million convertible preferreds at $9.37 apiece. The preferreds will initially be convertible into common stock at the purchase price. ADA-ES common stock (Nasdaq: ADES) closed at $6.58 on Monday, lower by 18.76% or $1.52.

The company also will sell 1.8 million series B preferred stock at a price to be determined. The price for the series B preferreds will not exceed $16.50 per preferred share.

Based in Littleton, Colo., ADA-ES develops and implements environmental technology and specialty chemicals used to mitigate the environmental impact of electric power and industrial companies.

The deal was announced as part of a joint venture between ADA-ES and Energy Capital Partners that will produce activated carbon for the mercury emissions control market for coal-fired power plants.

"We are thrilled to be partnering with ECP," said ADA-ES president and chief executive Michael D. Durham in a statement. "With its $2.25 billion fund established for energy infrastructure projects, ECP is able to provide the resources to help us implement our plans to serve the growing demand in the power plant mercury control market which include building multiple AC production plants."

Peter Labbat, a partner at Energy Capital, also stated: "We are excited about our partnership with ADA-ES, the leader in mercury emissions control for coal-fired power plants, and our participation in this new market that ADA-ES has played such an important role in developing. We see this as the beginning of a long-term relationship between ECP and ADA-ES, starting with this first AC [activated carbon] production facility and growing through additional production lines as the AC market grows."

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