IC Potash Corp. (
TSX: T.ICP,
Stock Forum) said Friday that Cartesian Capital Group LLC has made a strategic investments of US$10 million in ICP’s wholly-owned Intercontinental Potash Corp. (USA) mining unit.
ICPUSA owns the company’s Ochoa sulphate and potash processing project in Lea County, New Mexico.
Cartesian has acquired 500,000 Class A preferred shares of ICPUSA at US$20 a share.
“We are extremely pleased that IC Potash and the Ochoa Project have received this vote of confidence from Cartesian Capital Group., an internationally recognized private equity group,'' said ICP President and CEO Sidney Himmel.
Cartesian Managing Partner Dr. Peter Yu had the following comments about the deal: “Global growth is driving long-term demand for sustainable fertilizers and efficient agricultural practices.’’
“In my view ICPUSA – through development of the Ochoa Project – will serve this need by becoming a leading-low cost producer of potassium sulphate,” he said.
Under the terms of the financing, the preferred shares accrue value through deferred dividends at an annual rate of 12% for two years. At the end of the two-year period, the preferred shares may be converted into 7.8% of the outstanding common shares of ICPUSA, or may be redeemed at the option of Cartesian.
The private equity group has the right to a 33% participation in future equity financings by ICPUSA.
Meawhile, AltaCorp Capital analyst John Chu welcomed the financing announcement, saying that an injection of capital from a private equity firm has elevated the prospects for IC Potash, which jumped 6.2% to 25.5 cents Friday, leaving a market cap of $44.1 million, based on 172.8 million shares outstanding. The 52-week range is 36.5 cents and 20.5 cents.
“The company has now secured the financial means to get to the next step of the development process,’’ Chu was quoted as saying in a Globe and Mail report that was published by Stockwatch.
As a result, he raised his rating on the stock to “outperform” from “sector perform,” the published reports said.
Chu is maintaining a target of 40 cents for the shares, the reports said.
FULL DISCLOSURE: IC Potash is a client of Stockhouse Publishing.