Dow to raise $4 billion; Parent gets $25 million loan; Anvil to sell stock; Forterra downsizes placement

By Kenneth Lim

Boston, July 10 - A number of mega-sized deals hit the market on Thursday, led by The Dow Chemical Co.'s $4 billion placement of convertible preferred stock to two investors to help fund its planned acquisition of Rohm & Haas Co.

The Parent Co. said it negotiated a $25 million of debt financing from the D.E. Shaw group to fund its activities for at least two years.

Anvil Mining Ltd. plans to sell C$296.67 million of its common stock to a trust linked to the family of diamond industry veteran Dan Gertler.

Forterra Environmental Corp. downsized its previously planned C$2.5 million placement of units, raising C$2.2 million from the first tranche and expecting C$335,000 from the second and final tranche.

Dow raises $4 billion for Rohm & Haas

Dow Chemical said it plans to issue $4 billion of 8.5% convertible preferred stock to Berkshire Hathaway and Kuwait Investment Authority as part of the financing for its newly announced plan to acquire Rohm & Haas.

Dow will sell $3 billion of the securities to Berkshire Hathaway and $1 billion to Kuwait Investment Authority.

The preferreds may be converted into Dow common stock at an initial conversion price of $41.32 per share, an initial conversion premium of 20% over the company's three-day volume weighted average price.

Dow common stock (NYSE: DOW) dropped 4.24% or $1.44 to close at $32.52.

Dow is a chemical company based in Midland, Mich. Rohm & Haas (NYSE: ROH) is a Philadelphia-based competitor.

The company said Thursday it plans to acquire all of Rohm & Haas' outstanding common stock at $78 per share in cash, a total of about $15.29 billion. Including assumed debt, the deal is valued at about $18.8 billion.

Berkshire Hathaway will become Dow's largest shareholder after the placement.

"Dow has a great deal of respect for Rohm & Haas and values the strong market-facing culture and solid reputation that have made it one of the most successful companies in the specialty sector and such a desirable entity," Dow chairman and chief executive Andrew N. Liveris said in a statement. "We are also thrilled with the investment by Berkshire Hathaway and the Kuwait Investment Authority, which we believe further underscores the merits of this transaction, our strategy and the great growth potential resulting from Dow's transformation."

Dow chief financial officer Geoffery Merszei said on a conference call with analysts and investors that the premium of the acquisition pricing - 74% to Rohm & Haas's Wednesday close - was recognition of the quality of the target company.

"While it's hard to put a price on a company's culture and people, this premium recognizes the fact that Rohm & Haas is a highly coveted asset," Merszei said.

Parent lands $25 million financing

The Parent Co. secured a $25 million commitment from the D.E. Shaw group.

The agreement is in the form of non-convertible junior secured debt, with $10 million made immediately available. That initial tranche is accompanied with an equity warrant component.

Parent common stock (Nasdaq: KIDS) closed at $1.75 on Thursday, higher by 2.76% or $0.05.

Parent, a Denver-based commerce and media company focused on the growing-families market, said it will use the proceeds to fund its growth and new business initiatives for at least the next two years.

In a statement, Parent said it chose the financing deal with D.E. Shaw because the alternatives were deemed to dilutive to existing shareholders. The new facility is a second lien debt financing behind CIT Bank, which has already provided a $25 million revolving credit facility.

"We're extremely pleased to announce this agreement with the D.E. Shaw group," Parent president and chief executive Michael J. Wagner said in a statement. "The terms of this agreement are far superior to those available in either the equity market or the convertible debt market. Unlike a market-priced convertible debt transaction that would have resulted in a sizable amount of dilution to existing equity holders, this agreement is structured as a more traditional debt financing that includes a small equity warrant feature."

Anvil lands Gertler investment

Anvil Mining plans to sell C$296.67 million of its common stock to Catala Global Ltd., a trust that benefits the family of diamond industry veteran Dan Gertler.

The deal involves about 23.73 million common shares at C$12.50 apiece. Anvil common stock (TSX: AVM) closed at C$10.90 on Thursday, a 22.06% or C$1.97 gain.

Proceeds will be used for completion of Anvil's projects in the Democratic Republic of Congo and for general working capital.

Based in Toronto, Anvil is a copper and silver production company.

The deal will give Catala about 25% of Anvil's outstanding shares. Catala will also be entitled to nominate one person to Anvil's board of directors, and will have the option to take part in future securities issuances to maintain its stake.

Forterra raises C$2.2 million

Forterra raised C$2.2 million in the first tranche of a private placement of units and said it expects $335,000 in the second tranche.

The deal priced for C$2.5 million on June 27.

In the first tranche, the company sold about 14.64 million units at C$0.15 apiece.

Each unit consists of one common share and one half-share warrant. Each whole warrant will be exercisable at C$0.25 for two years.

Forterra common stock (TSX: FTE) slid 5% or C$0.01 to close at C$0.19 on Thursday.

Proceeds will be used for working capital purposes.

Concord, Ont.-based Forterra produces and markets premium organic soil enrichment products.

"We are very pleased that this private placement was well received by institutional investors," Forterra chairman and chief executive Donald Green said in a press release.

"Approximately 67% of the private placement was subscribed for by six prominent Canadian-based investment fund managers. We will be using these funds to strengthen our balance sheet and to provide the working capital needed to support our increasing production of our solid Forterra Worm Castings and liquid Forterra Worm Tea Castings products."

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.