Onyx Software wraps $7.85 million offering; new issuance remains low, sell-siders say

By Sheri Kasprzak

Atlanta, May 13 - Onyx Software Corp. led private placement news to close out a week marked by a significant drop in volume.

Onyx wrapped a $7,853,796 offering comprised of 2,825,097 shares sold at $2.78 each to three directors and the company's chief financial officer Robert Chamberlain.

After the closing was announced Friday morning, Onyx's stock gained $0.13, or 4.68%, to close at $2.91, and gained an additional $0.20 in after-hours trading.

"It's right in line," said one market source who had seen the deal. "Of course, that probably has something to do with selling to insiders, and I highly suspect that it does. But it worked for them."

"We are excited and encouraged by the commitment express by members of our board of directors and our chief financial officer through the investment of their personal funds in Onyx's future potential," said Janice Anderson, the company's chairman and chief executive officer, in a statement. "We believe that the terms of this transaction are very favorable to the company and demonstrate tremendous support for Onyx and our new strategic direction."

Based in Bellevue, Wash., Onyx develops software to automate customer processes for corporate clients. The proceeds will be used for working capital and general corporate purposes.

Elsewhere in the private placement market, sell-siders said even though more deals closed on Friday, new deals were still sparse as the week ended.

"The conditions are really not very good, if you look at a wide variety of factors," said one sell-sider. "You've got lower stocks, both in the broad market and for sectors that have traditionally done PIPEs. So it's rather bleak right now."

Another sell-sider disagreed that the picture was that bleak.

"I think that's a bit dramatic," that source said. "It's not like no one is doing anything. There are deals out there."

However, that source noted, and has noted earlier this week, that the size of the deals in the market have been getting smaller and smaller as stocks have dropped only to make meager gains when they do rise.

Friday was no different for the stock market. After suffering serious losses on Thursday, most of the indexes were down again Friday.

The Dow Jones Industrial Average lost 49.36 to close at 10,140.12 and the S&P 500 ended down 5.31 to close at 1,154.05, while the Nasdaq composite index gained 12.90 to close at 1,976.78.

Cellegy raises $6 million

Over in the biopharmaceutical sector, Cellegy Pharmaceuticals, Inc. finished a $5,999,400 private placement of stock with five institutional investors and three of its directors.

The company sold 3,636,000 shares at $1.65 each, a 21% discount to the company's average closing price for the past 10 days.

The institutional investors received class A warrants for 727,273 shares and class B warrants for 727,273 shares. The five-year class A warrants are exercisable at $2.25 each, a 36% premium to the offering price. The five-year class B warrants are exercisable at $2.50 each for five years, a 51% premium to the offering price.

"We are pleased to have completed this financing with five of our current institutional investors and three of our directors," said Richard Williams, the company's chairman and interim chief executive officer. "We welcome our new investors and thank our current investors for their continued support of Cellegy. C.E. Unterberg Towbin acted as an advisor to the company and was instrumental in helping us to broaden our investor base and with the execution of the transaction. These additional funds should help support the company's cash needs through early 2006 and will allow us to continue our key tactical and strategic programs initiated in January 2005."

C.E. Unterberg, Towbin, LLC was the placement agent.

Based in Brisbane, Calif., Cellegy is a biopharmaceutical company that develops prescription drugs to treat HIV and sexual dysfunction, gastrointestinal disorders and cancers.

On Friday, Cellegy's stock closed up $0.05 at $2.18.

Two Canadian deals cancelled

In the broader private placement market, two Canadian companies dropped private placements they had announced last month, citing poor market conditions.

Marauder Resources East Coast Inc., a Calgary, Alta.-based oil and natural gas company, put the lid on a C$26 million offering it had priced through placement agent Dundee Securities Corp. on April 4. That particular deal had included flow-through shares and units of one share and one half-share warrant.

On Friday, Marauder's stock slid C$0.31, or 23.85%, to close at C$0.99.

Both the flow-through shares and the units had been priced at C$1.50 each.

Diamond Fields International Ltd. dropped a C$5 million private placement it had arranged through GMP Securities Ltd. and Haywood Securities Inc. on April 13, citing "adverse market conditions."

The Vancouver, B.C.-based marine diamond exploration company had intended to sell 14,285,715 units at C$0.35 each.

Diamond Fields' stock lost C$0.02 to end at C$0.30 Friday.

"On the Diamond Fields, it was 20% of the float, so a big deal for the size of the company," said one market source. "[I] don't know the company. Marauder seems to be a little different, but [I] have no knowledge of either company. Obviously oil is a little weaker, which does not help."

Celtic's stock dips

Celtic Exploration Ltd.'s stock slid a day after closing a C$30.75 million private placement.

The company's stock closed down C$0.10 at C$10 on Friday.

Thursday, when the closing was first announced, Celtic's stock dropped C$0.15 to close at C$10.10.

The company sold shares at C$10.25 each.

"I would say it has less to do with [the deal] and more to do with lower stocks in general," said one Canadian market source following the deal. "There's really nothing else that would drive it down and the offering was really priced in line."

Celtic, based in Calgary, Alta., is an oil and natural gas development and exploration company.

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