Denison squeaks under the wire with uranium financing
Boyd Erman
RTGAM






Denison Mines Corp. , a uranium producer, said Tuesday that it was "pleased to announce" that it had closed a bought deal financing to raise $65-million (Canadian). No kidding: Denison shares are now more than a third below the issue price the company agreed to with its banks last month, thanks to the mess in Japan.

Denison announced the financing on Feb. 23, saying it would sell 18.3 million common shares at $3.55 apiece to a syndicate of investment dealers led by GMP Securities, Cormark Securities and Scotia Capital, and which also included Dundee Securities and Raymond James. Since then, the stock has been sliding. The slump has only accelerated this week as the situation in Japan has worsened, fanning investor fears about the future of the nuclear power industry.

As a result, Denison was trading at $2.22 a share as of midday Tuesday.

That means that the underwriters, unless they have successfully placed all the stock, are in the hole to the tune of $1.35 a share for all the stock that remains unsold in inventory (and given the stock chart since the offering was announced, there's likely to be a fair bit). In the worst-case scenario, if the banks are totally hung on the deal and haven't sold a lick of stock, they could be on the hook for a shared loss of as much as $24.7-million based on where the shares are now.