Discovery Air prices C$25 million convertible offering; Analytical Surveys raises $1.65 million

By Sheri Kasprzak

New York, Nov. 30 - Heading up another light day of PIPE action Thursday was a C$25 million convertible debenture deal from Canada's Discovery Air Inc.

Oil prices may be the culprit in waning volume, according to one sellsider based in New York.

"Everyone is watching oil come back and that may be giving some pause," he said. "Stocks are getting hit from it [in the broad market] and that's making some [issuers] wary."

Oil prices have climbed for the past three sessions, on Thursday gaining 58 cents to settle at $63.13 per barrel.

Sellsiders have noted this week that the end of the year tends to be the heaviest time for PIPE volume as issuers look to get offerings on their books by year-end. However, issuance has been relatively light this week.

Meanwhile, stocks were mostly down on Thursday with the Dow Jones Industrial Average giving up 4.80 to close at 12,221.93 and the Nasdaq composite index closed down 0.46 to end at 2,431.77. The Standard & Poor's 500 composite index edged up 1.15 to close at a record 1,400.63.

Discovery Air's deal

Moving back to the Discovery Air offering, the company sold C$25 million in 8.75% unsecured subordinated convertible debentures due Dec. 31, 2011.

The debentures are convertible at C$2.05 each, a 20.5% premium to the company's C$1.70 closing stock price on Wednesday.

The deal is being placed through a syndicate of underwriters led by GMP Securities LP. The syndicate has a greenshoe for up to C$3.75 million in additional principal any time up to 30 days before closing, which is expected to occur Dec. 19.

Proceeds will be used to acquire Air Tindi Ltd.

On Thursday, the company's stock closed unchanged at C$1.70 (Toronto: DA).

The offering comes on the heels of the company's fourth-quarter earnings report.

For the quarter ended Oct. 31, the company reported net earnings of $4.3 million, compared with $17,000 in net earnings for the same quarter of 2005. Total revenues for the quarter were $22.1 million compared with $1.5 million for the corresponding 2005 quarter.

This is not the first time Discovery Air has conducted a PIPE. The company sold 16,129,032 units of one share and one half-share warrant for proceeds of C$25 million in June. That deal was conducted to acquire Great Slave Helicopters Ltd.

Toronto's Discovery Air operates subsidiaries that provide helicopter services to the private sector, including Canada's mining industry.

Analytical Surveys closes deal

Elsewhere in the market, Analytical Surveys, Inc. wrapped a $1.65 million offering of 13% senior secured convertible notes with four institutional investors.

The one-year notes were purchased by Monarch Capital Fund, Ltd.; Harborview Master Fund, LP; and DKR Soundshore Oasis Holding Fund, Ltd.

The notes are convertible into common shares at $0.695 each, a 23.6% premium above the company's fair market value on Nov. 24.

The investors also received warrants for 2,374,101 shares, exercisable at $0.57 each.

Palladium Capital Advisors LLC was the placement agent.

Proceeds will be used to expand and diversify the company's investments in oil and gas properties.

The company's stock gained a penny on Thursday to settle at $0.67 (Nasdaq: ANLT).

Located in San Antonio, Texas, Analytical Surveys is an oil and natural gas company focused on non-operating exploration and production of U.S. onshore oil and gas reserves.

Urex raises $1 million

Looking to resources deals, Urex Energy Corp. announced the completion of a $1 million offering of units.

The company sold 4 million units in the deal. The price per unit is a 72% discount to the company's $0.89 closing stock price on Wednesday. After the deal was announced late Thursday, the stock gained 3.95%, or 4 cents, to close at $0.92 (OTCBB: URXE).

Each unit includes one share, one series A warrant for one half of a share and one series B warrant for one half of a share.

The whole series A warrants are exercisable at $0.25 each for one year and whole series B warrants are exercisable at $1.00 each for two years.

Proceeds will be used for working capital.

Headquartered in Prosper, Texas, Urex is a uranium exploration company.

Aquila's stock edges up

In other resources news, Aquila Resources Inc. saw its stock rise slightly a day after the company upsized to C$20.6 million its previously announced private placement from C$10 million.

The stock gained 2 cents, or 1.02%, to close at C$1.99 (TSX Venture: AQA) after gaining 7 cents, or 3.68%, on Wednesday to close at C$1.97.

The offering includes units of one share and one half-share warrant at C$1.65 each.

The company expects the deal to close Dec. 14.

Toronto-based Aquila is a copper, gold and silver exploration company.

Ampal-American's stock dips

Elsewhere in secondary market activity, Ampal-American Israel Corp.'s stock closed off on Thursday after the company announced a $37,863,577 PIPE on Wednesday.

The company's stock gave up a penny Thursday to end at $4.65 (Nasdaq: AMPL).

On Wednesday, the company's stock climbed 3 cents to close at $4.66.

The company plans to sell shares at $4.65 each, a slight premium to the company's $4.63 closing stock price on Tuesday.

Based in Tel Aviv, Ampal-American acquires interest in businesses in Israel.

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