Foamex receives additional $20 million; WorldWater gets $35.64 million boost; Longford plans unit sale

By Kenneth Lim

Boston, Feb. 13 - Foamex International Inc. said Wednesday it was glad to receive the support of its three biggest shareholders, who bought an additional $20 million worth of convertibles and equity.

Meanwhile, WorldWater & Solar Technologies Corp. raised $35.64 million through a private placement to California-based Quercus Trust.

Longford Energy Inc. said it will conduct a private sale of share-and-warrant units to raise C$3 million, while Octillion Corp. closed a $3.68 million stock-and-warrant deal.

Foamex touts investors' commitment

Foamex International said it sold $20 million of series D convertible preferred shares and series E preferred shares to its three biggest shareholders, D. E. Shaw Laminar Portfolios LLC, Goldman, Sachs & Co. and Sigma Capital Associates LLC.

D.E. Shaw will buy 52.23% of the shares for a maximum of $10.45 million, Goldman will buy 27.94% of the shares for a maximum of $5.59 million and Sigma has agreed to buy 19.83% of the offered shares for a maximum of $3.97 million.

The series D preferreds will be convertible into common stock for one year and pay dividends monthly at a rate of 4.5% per annum.

The series E shares will pay dividends monthly at a rate of 9% per annum.

Proceeds will be used to assist in Foamex's compliance with financial covenants under its credit agreements for 2008.

Based in Linwood, Pa., Foamex manufactures flexible polyurethane and polymer foam products.

"You should interpret it as strong commitment from our three main shareholders," Foamex president and chief executive Jack Johnson told Prospect News, adding that D.E. Shaw holds about a 24% stake, Goldman about 20% and Sigma about 6.5% to 7%. "They're our three major shareholders and they're the ones that have stepped up to the plate to support the company."

Foamex also said Wednesday that it expects its main operating subsidiary, Foamex LP, to achieve at least a consolidated EBITDA of $97 million for 2007, which is the minimum amount required to comply with its covenants under certain credit agreements.

Foamex said it also significantly exceeded its targets for debt reduction in 2007. Its net debt as of Dec. 30, 2007, was about $529 million, less than the $560 million originally projected.

Bob Larney, executive vice president and chief financial officer of the company, said in a press release, "I'm pleased with the company's strong ability to generate cash to reduce debt."

Johnson explained that the decision to sell convertible preferred stock and preferreds, as opposed to debt or other forms of financing, was made to abide by the company's credit agreements.

"It really is something that's permitted under the credit agreements, and it was worked out with the three parties," Johnson said.

The company hopes the shareholders will continue to be supportive, Johnson said.

"Our three major shareholders will never be ignored, right?" Johnson said. "While we will treat every shareholder the same, we certainly hope that our major shareholders will continue to be there when we need them."

WorldWater gets windfall

WorldWater & Solar Technologies said it sold $35.64 million of convertible preferred stock and warrants to major shareholder the Quercus Trust.

The 20,000 series F convertible preferred shares were priced at $1,782 apiece and are each convertible into 1,000 shares of WorldWater common stock. The warrants will allow Quercus to buy 29 million additional common shares at a strike price of $1.815.

WorldWater is a Pennington, N.J., solar engineering and project management company.

"Thanks to the steadfast commitment of the Quercus Trust, WorldWater now has the funds critical to drive future growth," WorldWater chairman and chief executive Quentin T. Kelly said in a statement. "A portion of the financing will be utilized to complete the construction of our 50 MW production plant in Texas, which is vital to the many large awards we are now pursuing. The funds will also be used to hire staff, support global expansion, and bolster our R&D."

With the transaction, Quercus will control about 24.1% of WorldWater, from 11.5% previously, WorldWater said. Quercus is a trust controlled by David Gelbaum, a California-based investor who has been an active supporter of environmental causes.

Longford to place units

Longford Energy, previously known as Longford Corp., said it will conduct a private placement of share and warrants for C$3 million.

The company will sell 11,111,111 units of one share and one transferable warrant at C$0.27 apiece. Each warrant will be exercisable at C$0.35 for two years.

Settlement is expected Feb. 20.

Proceeds will be used to repay debt and for general corporate purposes.

Longford is a Toronto-based oil and gas exploration company.

Octillion closes deal

Octillion said Wednesday that it closed a private placement of stock and warrants for $3.68 million.

The company sold 3,675,000 shares at $1.00 apiece and warrants for an additional 3,675,000 shares on Feb. 8.

Each warrant is exercisable at $1.25 for three years.

Octillion said the proceeds of the deal will be used for general corporate purposes.

Westminster Securities Corp. and Palladium Capital Advisors, LLC were the placement agents.

Auburn Hills, Mich.-based Octillion is a technology incubator focused on the identification, acquisition, development and eventual commercialization of emerging technologies.

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