China BAK Battery leads PIPEs with $43.45 million deal; gold offerings make a comeback

By Sheri Kasprzak

New York, Sept. 14 - Lithium ion battery maker China BAK Battery, Inc. topped private placement news on Wednesday with word that it will close a $43.45 million stock deal by the end of the week.

China BAK, which is based in Dallas but has operations in Shenzhen, China, will issue 7.9 million shares at $5.50 apiece to a group of institutional investors. On Aug. 10, the company had 40,978,533 outstanding common shares, according to its latest earnings report filed Sept. 1.

The deal is set to close by Friday.

The impending settlement of the deal was announced Wednesday afternoon, and by the close of the market, China BAK's stock had gained a dime, or 1.41%, to end at $7.20.

China BAK completed a similar offering on Jan. 20, selling 8,600,433 shares at $1.98 each for proceeds of $17,028,857.

The offering was conducted as part of Medina Coffee, Inc.'s merger with BAK International, Ltd. to form China BAK.

Looking at the company's earnings, China BAK reported net income of $3,362,174 for the quarter ended June 30, 2005, more than double its net income of $1,597,617 for the same quarter of 2004.

In the broader market, sellside sources said natural resources offerings may be making a comeback - but energy companies may not be as prevalent.

"There was a huge saturation of them [energy deals] after the spike in prices a couple of weeks ago," said one market source. "Now oil has tapered off and investors, I think anyway, have shut the window on them."

At least temporarily, another source added.

"There will always be a market for energy deals," he said. "There will always be companies digging for oil and there will always be people eager to eat it up. And so there will be investors looking to make some money from it if they can. It's not a portion of the market that will vanish. As for now, I'd say it's pretty accurate that the number of deals we're seeing has gone down."

On Wednesday, oil prices were back up, gaining $1.29 to end at $64.40 per barrel.

So what natural resources companies might make up the influx of offerings in the coming days and weeks? Gold and copper seem to be the answer coming from two market sources out of Canada.

"Gold prices are way up," once source said. "That's definitely fueling things. It affects copper too. The two are linked."

Another market source north of the border said gold had been poised to reach record highs earlier this year but backed down as the year progressed. Now, he believes, the shiny precious metal may be headed toward records again.

"It's hard to say, these things are impacted by oil to a degree," he noted. "I feel it could happen before the end of the year."

Toreador raises $25 million

Moving back to oil, Dallas-based Toreador Resources Corp. announced that it is closing a $25 million stock offering.

The company said it expect to issue 806,450 shares at $31.00 each to a group of institutional investors on Thursday.

The price per share is a 9.4% discount to the company's closing stock price of $34.20 on Sept. 9.

The proceeds will be used for exploration and development in 2005 and for general corporate purposes.

After the deal was announced Wednesday morning, Toreador's stock gained $2.51, or 7.58%, to close at $35.64 and gained another $0.19 in after-hours trading.

Toreador is an oil and natural gas exploration, development, acquisition and production company.

Some gold deals from Canada

Heading back to those gold offerings, Toronto-based Crystallex International Corp. led a slate of gold deals on Wednesday.

The company announced that it obtained a C$60 million equity line and raised C$10 million from a unit offering composed of notes, stock and warrants from Azimuth Opportunity Ltd.

Under the terms of the two-year equity line, Azimuth will buy shares of Crystallex at a price equal to a discount of 4% to 7%, based upon Crystallex's market capitalization, of the volume weighted average price for the 20 consecutive trading days beginning five days after notice of a draw.

There is a C$2.50 floor on the price per share, and Crystallex may draw a minimum of C$4 million and a maximum of C$13 million per draw.

The units sold to Azimuth include C$10 million in principal of 5% secured notes due March 13, 2006, 200,000 common shares and warrants for 450,000 shares.

The warrants are exercisable at C$3.19 each through Sept. 13, 2006.

Proceeds from the unit offering will be used for working capital and general corporate purposes.

On Wednesday, the company's stock gained C$0.10 to close at C$3.00.

"We are pleased to have arranged this unit financing and equity draw-down facility with Azimuth," said company chief executive officer Todd Bruce in a statement. "The unit financing will address the company's immediate financing requirements and will provide an effective bridge to the equity draw-down facility or future financing arrangements.

"The structure of the equity draw-down facility provides Crystallex with a 'backstop' financing facility to maintain the company's momentum while we continue working with the Ministry of Environment in Venezuela on securing the final permit for Las Cristinas. Our objective is to minimize to the extent possible the amount of financing done on a pre-permit basis. The equity draw-down facility with Azimuth provides us with sole control on when and how much equity we draw down in order to meet our financing objectives."

Also on Wednesday, Sunridge Gold Corp., a gold explorer out of Vancouver, B.C., priced a C$3.9 million unit deal.

The company plans to sell up to 6 million units at C$0.65 each.

The units include one share and one half-share warrant, the whole of which is exercisable at C$0.90 each for two years.

Proceeds will be used for contracting at least one additional drill rig for development at the Asmara project. The remainder will be used for working capital.

Based in Vancouver, B.C., Sunridge is a gold exploration company.

Sunridge's stock advanced C$0.02 to close at C$0.72.

Another Vancouver gold company, Bishop Gold Inc., announced its plans to raise up to C$1.2 million in a unit offering.

That deal is composed of up to 24 million units at C$0.05 each.

The units include one share and one warrant. The warrants are exercisable at C$0.10 each for two years.

After announcing the offering early Wednesday, the company's stock shot up 66.67%, or C$0.04, to close at C$0.10.

The proceeds will be used for work on the Lawyers group of claims in the Toodoggone region of British Columbia. The rest will be used for working capital.

Access Pharma stock dips

Access Pharmaceuticals Inc.'s stock took a southward trip on Wednesday after the company announced it received an extension on the maturity of some of its 7% convertible notes.

The company's stock slipped 11.63%, or $0.10, to close at $0.76 on Wednesday.

Earlier in the day, the company announced that Oracle Partners, LP, which holds $4,015,000 of the convertible subordinated notes due on Sept. 13, 2005, agreed to extend the maturity to Oct. 13.

Access also said it had been unable to make payment on another $4,015,000 of the notes held by another investor on Sept. 13.

"At the current stock price and available shares, they're already tapped out," said one buyside source following Access. "Noteholders are probably letting Access sell the assets, rather than forcing bankruptcy, for now."

The troubled pharmaceutical company said late last week that it is in talks to renegotiate some of its debt as it tries to sell some of its undesirable business units.

Based in Dallas, Access is a pharmaceutical company focused on the development of novel low-development risk product candidates and longer-term products, including a treatment for cancer.

Protein Design stock sinks

A day after completing a $100 million stock deal with Biogen Idec MA, Inc., Protein Design Labs Inc.'s stock took a hit.

The pharmaceutical company's stock finished Wednesday down $0.54, or 1.82%, to close at $29.21.

On Tuesday, when the closing was first announced, Protein Design Lab's stock gained $0.57 to end at $29.75.

The offering was conducted as part of a collaboration agreement with Biogen Idec under which Biogen bought shares equal to about $100 million.

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