Kennedy-Wilson issues first stock in 10 years; Coronation Minerals, Seaview Energy in flow-through deals

By Kenneth Lim

Boston, May 6 - Kennedy-Wilson Inc. announced its first equity financing in a decade on Tuesday as the company prepares for an aggressive investment plan.

Meanwhile, Coronation Minerals Inc. said it will raise up to C$4.14 million through non-brokered placements of flow-through and non-flow through units.

Seaview Energy Inc. is eyeing C$5 million from a bought-deal placement of flow-through shares, while Et-China.com International Holdings Ltd. said it will sell £5.5 million of convertibles to three investors.

Kennedy-Wilson boosts coffers

Kennedy-Wilson said it plans to raise $40 million in a private placement of preferred shares, of which about a fifth is going to insiders and senior management.

The company is selling 7% cumulative convertible preferred stock at with an initial conversion price of $42. The preferreds must be converted within three years.

Kennedy-Wilson common stock (Pink Sheets: KWIC) closed unchanged at $40 on Tuesday.

Kennedy-Wilson, a real estate services and investment firm based in Beverly Hills, Calif., said the proceeds of the placement will be used for its war chest as it eyes an aggressive acquisition strategy.

"Kennedy Wilson believes that the significant restructuring now underway in almost every real estate asset class presents a historic profit-making opportunity similar to that which existed in the early 1990s for those companies which can move prudently and quickly," the company said in a statement. "In order to take advantage of this opportunity, the company intends to have available $200 million of cash which will be generated from its asset sales, unused lines of credit and the proceeds from the preferred stock offering."

Senior management and Kennedy-Wilson's largest outside shareholder will take $7.5 million of the offering, with Kennedy-Wilson chief executive William J. McMorrow investing $5 million of that amount.

"We have historically generated very high rates of return from all of our investment activities," McMorrow said in the statement. "We are uniquely positioned to take advantage of the current opportunities in all sectors of the real estate investment business. In addition, our services platform led by our real estate auction business should have a record year in 2008."

Kennedy-Wilson chief financial officer Freeman Lyle told Prospect News that the equity-based financing was the company's first in a long time.

"It's a significant capital raise for us," Lyle said. "In terms of dollars, we have a portfolio of about $3 billion, so it's not big compared to our portfolio. But it's significant in that it's the first fundraising for us in 10 years. We've been buying back stock, and for us to issue stock at the parent level now is a big change, and we're doing it because we're seeing plenty of opportunities...There are sellers in various forms of distress now, and this is the first true buyer's market that we've seen in real estate in the last 15 years."

Kennedy-Wilson sees opportunities across the board, Lyle said.

"Our company is uniquely positioned to take advantage of these times," he said. "Our distressed notes and note pools, we have not been very active in that, but as we head into what we believe will be a significant downturn, that business should pick up."

Investor sentiment is poor for the real estate market at the moment, so Kennedy-Wilson kept the deal private, Lyle said.

"It's a private placement, so we're not scattering this far and wide to strangers," Lyle said. "The people we're placing this with understand the company and the business...I can't say who the investors are, but it will end up being a relatively small number."

To take advantage of that market, Kennedy-Wilson expects to be busy on the acquisition trail, Lyle said.

"We have a game plan to purchase about $3 billion in additional assets over the next three years," he said. "With our structure, those purchases would either be in our separate account business or fund business. To enable that, we need about $200 million, and we'll get that from various sources. From capital from operations, that will be about $100 million. We have about $100 million from an unused line of credit and another $40 million from this offering. We have a huge pipeline. This is not unusual, this acquisition program, but it's a little bigger than in the past."

Lyle said he was "very satisfied" with the pricing of the placement, and does not expect to have to return to the market soon.

"There's no need to do more than the $40 million," he said. "Together with our other sources of capital, that will provide sufficient capital."

Coronation raises C$4.14 million

Coronation Minerals said it is selling C$4.14 million of hard-dollar and flow-through units in a private placement.

The units will all be sold at C$0.18 each. Coronation common stock (TSX: CMV) gained 13.64% or C$0.03 to close at C$0.25 on Tuesday.

Each hard-dollar unit will consist of one common share and one warrant. Each flow-through unit will consist of one flow-through common share and one half-share warrant.

Each whole warrant is exercisable at C$0.30 for 18 months.

The warrants may expire sooner if the company's shares close at C$0.50 or higher for 20 consecutive trading days. In that case, the warrants will expire 30 days after the company notifies holders.

Coronation, a Toronto-based mineral exploration company, said proceeds will be used for exploration and development of the company's copper-nickel-platinum-palladium prospects in the Yukon and Nunavut territories and for general working capital purposes.

Seaview to sell stock

Seaview Energy said it is selling 2.3 million flow-through class A shares to raise C$5 million in a private deal.

The shares will be sold a C$2.15 each. Seaview's class A stock (TSX: CVU.A) ended flat at C$1.80 on Tuesday.

The deal will be conducted by a syndicate of underwriters led by Dundee Securities Corp. and including GMP Securities LP, Macquarie Capital Markets Canada Ltd., Blackmont Capital Inc. and FirstEnergy Capital Corp.

The underwriters have a greenshoe for an additional 466,000 shares, or C$1 million.

Calgary, Alta.-based Seaview is an oil and gas exploration company. Proceeds of the deal will be used for exploration.

Et-China.com prices bonds

Et-China.com International said it priced £5.5 million of zero-coupon convertible bonds due 2011 and sold them to three investors.

The bonds will yield 7% and are convertible into Et-China.com ordinary shares at an initial conversion price of £1.15. Et-China.com common stock (AIM: ETC) closed at £1.13 on Tuesday, higher by 0.44% or 0.5p.

Guangzhou, China-based Et-China, which provides travel services, said it will use the proceeds for acquisitions and marketing.

Hedge funds Och-Ziff and Ellerston Capital will take £2.5 million of the offering. Existing investor and Australia-based fund LFG Group will buy the remainder.

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