Montpelier Re gets $100 million capital boost; Synovics pockets $21.25 million from financing

By Sheri Kasprzak

New York, May 25 - Montpelier Re Holdings Ltd. may see a ray of sunshine after the troubled insurer suffered from a storm of financial woes following Hurricane Katrina.

The company just secured a $100 million investment from WL Ross & Co. LLC, a move one sellside market source said can only be good for them.

The source, who mentioned he doesn't personally deal with insurers but did see the deal on Thursday, said the deal can only be a good thing for the hard-hit insurance and reinsurance provider.

"If you look at their stock, they really took a hit after [Hurricane] Katrina," he said. "This is a huge investment; WL Ross is a strong investor."

On Aug. 29, 2005, when Katrina made landfall in Louisiana, Montpelier's stock closed at $34.03. A month later, on Sept. 29, 2005, the stock had fallen to $25.07. By the end of the year, on Dec. 30, 2005, the stock dropped to $18.90. So far this year, the stock has traded within a range between $20.38 and $15.12. The low of $15.12 was on May 19.

Looking to the specific terms of the placement, WL Ross has agreed to buy 6,896,552 shares at $14.50 each, only a slight discount to the company's $14.53 closing stock price from May 24.

As of May 8, Montpelier had 89,179,407 outstanding common shares.

The stock was propelled by the news on Thursday, closing up 6%, or 87 cents, to end at $15.40 (NYSE: MRH). At 1:30 p.m. ET, Montpelier's stock had already climbed 4.27%, or 62 cents, at $15.15.

The placement is expected to close in two tranches with the first, for $50 million, scheduled to close on June 1. The second tranche for the remaining $50 million will close upon the expiry of the Hart-Scott-Rodino antitrust notification period.

Connected to the offering, Wilbur L. Ross of WL Ross will be named to fill a vacant seat on Montpelier's board of directors.

Looking to the company's latest earnings statement, Montpelier reported net income of $39.82 million for the quarter ended March 31, compared with net income of $74.51 million for the same quarter of 2005. The company's net revenues sank to $154.22 million for the quarter from $210.93 million for the first quarter a year ago.

"We paid net losses of $133.7 million and $55 million for the three months ended March 31, 2006 and 2005, respectively," the company said in its earnings report. "The majority of the increase in paid losses during 2006 as compared to 2005 related to claim payments made of $95.6 million related to the four 2005 hurricanes: Dennis, Katrina, Rita and Wilma. We also expect that our paid losses will be higher than average during 2006 as we continue to pay claims related to the 2005 catastrophes. At March 31, 2006, approximately 66% of our gross revenues [were] related to the four 2005 hurricanes."

Located in Hamilton, Bermuda, Montpelier Re provides property and casualty reinsurance and insurance products.

Synovics raises $21.25 million

Moving to the biotech sector, Synovics Pharmaceuticals, Inc. sealed a $21.25 million private placement of convertible debt, non-convertible debt and stock as part of its acquisition of Kirk Pharmaceuticals, LLC and AndaPharm, LLC, an affiliate of Kirk.

In the stock portion of the deal, Synovics sold 1.5 million shares at $4.00 each for proceeds of $6 million. The price per share was level with the company's $4.00 closing stock price from May 24. The shares were purchased by Maneesh Pharmaceuticals PVT of Mumbai, India.

The company also issued $4.75 million in convertible debt.

Also, the Bank of India funded $10.5 million in five-year non-convertible debt. The debt bears interest at Prime rate plus 100 basis points.

The terms of the convertible debt could not be determined by press time Thursday evening.

Under the terms of the acquisition, Synovics purchased Kirk for $12 million with $9 million paid in cash and $3 million in debt. Kirk manufactures over-the-counter and generic drugs and is based in Fort Lauderdale, Fla.

At the end of the day, Synovics' stock dropped 20 cents to settle at $3.80 (OTCBB: SYVC).

"Today's announcements mark a watershed event for our company," said Ronald Lane, the company's chief executive officer, in a statement. "The financing funds the acquisition of Kirk, provides capital to accelerate development of our generic drug pipeline and creates a strategic relationship with Maneesh Pharmaceuticals.

"We have high expectations for Kirk, not only as a developer and manufacturer of our generic and 505(b)(2) drugs, but also in the development and sales of their over-the-counter and prescription products. The new strategic relationship with Maneesh offers many potential [research and development] manufacturing and marketing synergies, and we are extremely pleased with their investment in our future."

"Joining forces with Synovics will significantly strengthen Kirk's operating and product capabilities," said John Copanos, Kirk's president, in the news release. "The addition of Synovics' technology to Kirk will provide proprietary and patented drug manufacturing, increase new product opportunities for growth and support [of] our ongoing efforts to reduce manufacturing costs."

Phoenix-based Synovics develops controlled-release generic and branded oral drugs.

Uranium Energy wraps $5 million PIPE

In the resources sector, Uranium Energy Corp. wrapped up a $5 million sale of 2.5 million units.

The units are comprised of one share and one half-share warrant. Each warrant is exercisable at $2.50 for one year.

The placement was not brokered.

Proceeds will be used for exploration and development on the company's properties in Texas, Wyoming, Arizona and Utah.

"The private placement proceeds will be used to fund budgeted exploration and development on the company's properties in Texas, Wyoming, Arizona and Utah," said Uranium's CEO, Amir Adnani, in a statement. "In particular, development can continue to advance aggressively on the Goliad project in south Texas. Uranium Energy Corp. will also continue to actively pursue its ongoing land and database acquisition strategies in the U.S."

On Thursday, the stock gained 9.64%, or 24 cents, to end the session at $2.73 (OTCBB: URME).

Austin, Texas-based Uranium Energy is a uranium exploration and development company.

redCity's C$7 million offering

Moving to Canadian offerings, redCity Search Co. Inc. arranged a private placement of stock for a minimum of C$7 million.

The offering includes 84,848,484 shares at C$0.0825 each.

So far, J.L. Albright IV Venture Fund LP and J.L. Albright IV Parallel Venture Fund LP intend to buy up to C$3 million of the offering.

The deal is expected to close by the end of June.

Closing of the deal is contingent upon the conversion of $5,046,996 of loans and other debt into common shares at $0.25 each and the conversion of all outstanding preferreds into common stock at $0.35 each. One of the other conditions of closing is the completion of a $4 million placement of 48,484,848 shares.

The company is acquiring Zip411 Enterprises, Inc.

The stock remained unchanged at C$0.10 Thursday (TSX Venture: RDC).

Toronto-based redCity operates search engines that allow users to find local businesses.

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