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When a bought deal isn’t a bought deal, part 2 Add to ...

Sulliden Gold Corp. Ltd. has revised the terms of its latest bought deal, decreasing the size from $75-million to $50-million.

This type of cut is rare. A bought deal is a formal agreement between a syndicate of underwriters and an issuer, under which the syndicate agrees to purchase a pre-determined number of securities at a set price. That means the company knows how big its cheque will be, and the syndicate is responsible for selling the securities into the market. If the deal doesn’t sell, the syndicate is on the hook, not the issuer.

A similar decrease happened last summer, eerily enough with another gold company. In July, 2010, San Gold Corp. revised its $130-million bought deal to an $80-million offering.

Sulliden’s deal was co-led by National Bank Financial and Cormark Securities. The client is a new one for National, as Wellington West had been the lead underwriter for its past two offerings. NBF bought Wellington earlier this year.

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