(The following story by Mark Davis appeared on The Kansas City Star website on August 4, 2009.)
KANSAS CITY, Mo. — Amid stabilizing equity markets, Kansas City Southern and Commerce Bancshares Inc. both raised capital by dribbling out new shares to investors.
The sales pumped up both companies’ capital coffers and particularly helped make KCS financials a bit more fluid.
The railway raised $75 million, finding buyers two ways.
KCS garnered nearly $52.5 million through Merrill Lynch, which offered shares to investors in the second quarter as conditions met KCS guidelines.
Those buyers bought shares at prevailing market prices, paying an average of $16.38 a share for the 3.2 million new shares in the company that they bought.
The remaining 1.13 million shares went to a single institutional investor that KCS did not identify. The buyer paid $20 a share, which was roughly the market price at the time of that transaction, said Bill Galligan, a KCS spokesman.
KCS said it would use the $75 million for general corporate purposes, principally boosting its supply of readily available funds.
Galligan said the company recently spent $170 million, “a considerable drain in cash,” to complete a rail line in Texas that is important to its cross-border business strategy.
The company has no debt maturing until April 2011, having borrowed $190 million last December to retire debt that came due earlier this year.
KCS shares Monday gained $1.26 and closed at $21.57.
Commerce also completed its stock sale over several months, using a dribble-out plan through Morgan Stanley that it had announced in late February.
Kansas City-based Commerce said it would raise up to $200 million, but closed the offering Friday after collecting $100 million. Buyers paid an average price of $34.55, about where shares traded when the company announced the deal.
Commerce shares rose 64 cents and closed at $37.30.