paladin $413m capital raising

SMH This morning.
Paladin fund-raiser stocks the armouryXCHANGE
September 10, 2009
PALADIN ENERGY has made it clear the $413 million it is seeking from institutions is earmarked for acquisitions rather than a balance sheet fix, so now the market is pondering what it could buy.

The non-underwritten bookbuild, led by UBS and RBC Capital Markets, had an initial range of $4.45 to $4.70 but appeared to be firming to between $4.55 and $4.65, compared with Paladin's last closing price of $4.90. Retail shareholders might be disappointed there is no share purchase plan.

Paladin owns 19.3 per cent of an Australian and Namibian explorer, Deep Yellow, and 19.9 per cent of a Niger explorer, NGM Resources. Deep Yellow shares rose 18 per cent and NGM shares rose 8 per cent yesterday, giving them market values of $348 million and $29 million respectively.

Unless it wants to enter a bidding war, Energy Metals would appear to be a less likely target.

Paladin has a 42.1 per cent stake in its Bigryli joint venture in the Northern Territory, but a Chinese group made a friendly $85 million bid for 70 per cent of Energy Metals on Tuesday.

In past takeover bids Paladin has typically used its scrip rather than cash, so some analysts think it could make a scrip bid for a company and put its newly raised cash towards the development of the target's projects.

A bigger merger involving its closest rivals, Uranium One or Denison Mines, would be complicated by the Japanese and Korean groups that hold cornerstone investments in them, and those moves would require much more firepower than Paladin was raising yesterday.

Paladin has plenty of projects in Africa and Australia and has always held ambitions to expand elsewhere in the world, so it could be looking further afield in eastern Europe AND THE AMERICAS

There has long been speculation that Paladin could make an attractive purchase for Canada's Cameco, and so it is notable that Paladin did not follow Uranium One and Denison and raise cash from a cornerstone holder like an Asian utility.

Paladin's chief executive, John Borshoff, bragged to analysts last week that his company was the only non-aligned pure uranium producer in the world, so he clearly sees value in remaining independent at this stage.