Crew raises $150 million from convertible bond offering; rising oil prices worry sellsiders

By Sheri Kasprzak

New York, Oct. 17 - Crew Gold Corp. led private placement news to kick off the week with word that it is settling a $150 million convertible bond deal.

The offering is part of the London-based gold explorer's plan to acquire Guinor Gold Corp.

The 6% bonds mature in five years and are convertible into common shares at NOK 12.16 apiece.

"This major transaction will help us reach our publicly stated goal of transforming Crew Gold from a junior exploration and production company into a considerable intermediate-size international miner," said Jan Vestrum, Crew's president and chief executive officer, in a statement. "We will enhance the depth of our senior management and technical team, and have a strategic portfolio in several of the world's important gold districts.

"We also believe this transaction will expand our already strong shareholder base by providing us with greater visibility in the important North American capital markets."

Under the terms of the acquisition, Crew plans to buy all of Guinor's outstanding shares at C$1.50 each. The price per share represents a 20% premium to the weighted average closing price - C$1.25 - of Guinor's common shares over the last 30 trading days.

After the offering was announced Monday afternoon, Crew's stock gained $0.08, or 5.71%, to close at $1.48.

Crew also plans to undertake another private placement in connection with the acquisition in which it will sell shares at no less than NOK 9 each for between $150 million and $200 million. Pareto Securities Inc. is the lead agent for that deal, the details of which have not yet been determined.

Crew has conducted at least two private placements this year.

On Aug. 16, the company sold 19.45 million shares at NOK 10.50 each for proceeds of NOK 204,225,000. On June 9, Crew issued 17.6 million shares at NOK 8.2 each for NOK 144.32 million.

Pareto Securities was a placement agent on both of those offerings.

For the year ended June 30, Crew reported a net loss of $8.9 million, compared to a net loss of $2.9 million for the year ended June 30, 2004.

"The 2005 result is affected adversely by a decrease in non-cash equity earnings from its investment in Barberton Mines Ltd. of $2.3 million, nonrecurring finance charges of $2 million from the negotiated conversion of the convertible bonds and $1.9 million non-cash effect from currency losses," according to the company's latest earnings report. "This was mitigated by the positive effect of the company's sale of its interests in the Seqi Olivine project and interest savings from negotiated conversion of convertible bonds."

Moving to the broader PIPE market, a couple of sellsiders said Monday that a jump in oil prices following the threat of yet another hurricane might take its toll on the private placement market.

"It's really hard to tell at this point, but it could have an impact," said one market source. "When the others [hurricanes] hit, there was a decline, especially in stock-for-cash deals. What may happen is that more [issuers] will just look to convertibles or equity lines as a way to get around it."

Even though oil prices gained $1.73 to close at $64.36 per barrel, the major stock indexes all ended the day higher. The Dow Jones Industrial Average posted gains of 60.76 to close at 10,348.10; the Nasdaq composite index advanced 5.47 to end at 2,070.30; and the Standard & Poor's 500 composite index edged up 3.53 to close at 1,190.10.

Still, another sellsider said he fears that the impact on stocks may be delayed and that the jump in oil could mean fewer PIPE deals, at least for the short term.

"I'm not saying there will be a staggering lack of [offerings]," he said, "but maybe fewer than normal. Energy, minerals, things like that may actually improve. They have historically when oil prices lift."

Alliance plans $60 million PIPE

Looking to another offering, Alliance Distributors Holdings Inc., a College Point, N.Y.-based company that distributes video games, announced it plans to seek out a private placement for up to $60 million.

Sanders Morris Harris Inc. is the placement agent for the deal, the terms of which have not yet been determined.

Alliance intends to use the proceeds to fund the cash portion of its $75 million acquisition of Foto Electric Supply Co., Inc.

Alliance plans to pay $50 million in cash, $12.5 million in notes and $12.5 million in equity securities for the acquisition.

For the quarter ended June 30, Alliance sustained a net loss of $335,803, up from a net loss of $56,611 for the same period ended June 30, 2004.

On Monday, the company's stock gained a penny to close at $0.38.

Homburg prices C$5.04 million offering

Heading to Canada, Homburg Invest Inc. led private placement news there with the pricing of a C$5,038,750 offering of class A subordinated voting shares.

The offering includes 1,007,750 shares at C$5.00 each sold to a Canadian investment firm.

After the deal was priced Monday morning, Homburg's stock dipped C$0.15 to close at C$4.75.

Proceeds will be used for working capital.

Based in Halifax, N.S., Homburg owns and develops a portfolio of commercial, retail and residential real estate.

North American Tungsten's C$5 million deal

Elsewhere in Canada, Vancouver, B.C.-based North American Tungsten Corp. Ltd. announced a C$5 million stock offering.

The company intends to sell 4 million shares at C$1.25 each through a syndicate of placement agents led by Haywood Securities Inc. and Sprott Securities Inc.

Proceeds will be used for working capital.

The company's stock slipped C$0.09, or 7%, to end at C$1.20 Monday.

North American Tungsten is a mineral exploration company.

PNM Resources stock dips

After completing a $100 million PIPE offering of hybrid income term security units, PNM Resources Inc.'s stock slipped on Monday.

The company's stock lost $0.35, or 1.33%, to finish at $25.87 Monday.

On Friday, when the company announced the settlement of its private placement, the company's stock gained $0.28 to end at $26.22.

Under the terms of the offering, PNM sold units of a senior unsecured note and an obligation to buy stock in three years at $25.00 each.

Based in Albuquerque, PNM provides electricity and natural gas to customers in New Mexico and Texas.

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