Take physic, pomp

Wellington West elects to take a long-term position in South American Silver (SAC.to)

Oh dear. The problem with setting your company up as lead underwriter for a bought deal equity placement is that if the deal falls flat, you end up drowning your company (and career) in unwanted paper. Take the case of Wellington West, heading up the dudes that are trying to sell the South American Silver (SAC.to) bought deal at the moment.

Here’s a couple of key excerpts from when the bought deal was originally announced:

South American Silver Corp…………. announces that it has entered into an agreement with Wellington West Capital Markets Inc. (the “Lead Underwriter”), on behalf of a syndicate of underwriters (together with Lead Underwriter, the “Underwriters”), to sell 6,350,000 Units (“Units”) at a price of $0.63 per Unit for gross proceeds of approximately $4.0 million, on a “bought deal”, private placement basis (the “Offering”).


The Underwriters shall also have the option, exercisable up to 48 hours prior to closing of the Offering, to increase the size of the Offering by up to an additional 3,175,000 Units at the same price per Unit as is applicable to the Offering (the “Underwriters’ Option”)……..


Completion of the Offering is scheduled for July 12, 2010 and is subject to……

And here’s the NR out yesterday, updating on the deal:
South American Silver Corp. (“South American Silver” or the “Company”) is pleased to announce that it has closed 5,310,000 units, for gross proceeds of $3,345,300, of its previously announced bought deal private placement of an aggregate of 6,350,000 Units (“Units”), priced at $0.63 per Unit, for gross proceeds of $4,000,500 (the “Offering”). A second closing is anticipated to occur on or about July 19, 2010 for the remainder of the Offering. The Corporation has extended the period pursuant to which the Underwriters may exercise their option (the “Underwriters’ Option”) to increase the size of the Offering to July 23, 2010…..
So let’s see: The “first closing” comes three days late and over a million papers short of the target. The very ambitious 3.175m overallotment has also been extended from 48 to 96 hours after the new “second closing”, but what with the actual bot deal hardly flying off the shelves you have to wonder just how much of that overallot will make it out the door.

Thusly, Wellington gets to sweat on whether it’ll be holding a bag full of paper this time next week. You gotta wonder whether the unpopularity of this bought deal has anything to do with this, inquiring minds and all that jazz………..

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