Private placement volume picks up despite lower stocks; Forte plans C$15.6 million deal

By Sheri Kasprzak

Atlanta, Feb. 3 - More private placements hit the pipeline Thursday, even as stock prices sank and oil prices took another dip.

"More mergers," said one sell-side source of the increased volume. "Merger season has officially opened and you will be seeing more and more deals."

In fact, two companies announced private placements related to mergers Thursday.

Basic Empire merged with China Tailong Holdings Co., Ltd. and said it wrapped a $1 million offering and Xethanol merged with Zen Pottery Equipment, Inc. and announced the closing of a $3 million deal.

Both stocks and oil dropped Thursday.

The Dow Jones Industrial Average dipped 3.69 to end at 10,593.10; the Nasdaq composite index closed 17.42 lower at 2,057.64 and the S&P 500 edged down 3.30 to close at 1,189.89.

Oil lost $0.32 to close at $46.37 per barrel.

Meanwhile, Canadian oil and gas exploration company Forte Resources Inc. announced its plans to offer C$15.6 million in a private placement.

The offering includes 4 million shares at C$3.90 each.

"It's good pricing," said one market source. "Compare a C$4.05 close with C$3.90. Oil had until recently been doing well, but it's not an industry that you can really track with any sort of consistency. But I think you can expect this deal to go well."

The deal is being placed by a syndicate of underwriters led by FirstEnergy Capital Corp.

Forte is based in Calgary, Alta. The proceeds will be used to fund the company's ongoing exploration and development activities. The remainder will be used for general corporate purposes.

On Thursday, Forte's stock closed down C$0.13 at C$3.92.

Dwango raises $15 million

Dwango North America Corp. closed a $15 million private placement of series D preferred stock.

The company sold 15,000 shares of the preferreds at $1,000 each.

The preferreds pay annual dividends of 7% and are convertible into common shares at $1.40 each.

Warrants for a total of 3,365,035 shares at $1.68 each for five years were also issued in the offering.

Dwango, based in Seattle, is a wireless technology and communications company.

The company's stock closed $0.05 at $1.60 on Thursday.

Bear Ridge's C$7.1 million deal

Bear Ridge Resources Ltd. said it plans to raise C$7.1 million in a private placement.

The company will sell 2 million shares at C$3.55 each.

The offering is being placed through a syndicate of underwriters led by GMP Securities Ltd.

Bear Ridge is a Calgary, Alta.-based oil and gas exploration, development and production company. It plans to use the proceeds from the offering for the continued exploration and development of its properties.

Bear Ridge's stock closed at $9.10 Jan. 19, its last trade, under Bear Creek Energy Ltd., its former name.

DOR closes $3.77 million deal

DOR BioPharma Inc. finished a $3.77 million private placement offering Thursday.

The company issued 8,396,100 shares at $0.45 each to institutional investors.

The investors will also receive warrants for 6,297,075 shares at a price equal to 101% of the closing price per share at closing. The warrants are exercisable for five years.

"This financing provides working capital for our BioDefense vaccine programs and strengthens our balance sheet," said DOR's president and chief executive officer Michael Sember in a statement. "We expect that 2005 will be an eventful year for DOR as we are looking forward to getting clinical data from the phase I clinical trial of RiVax, continuing to develop BT-VACC, our orally administered recombinant botulinum toxin vaccine and positioning DOR to respond to any procurement orders from the U.S. government."

Based in Miami, DOR is a biopharmaceutical company focused on the development of vaccines and therapeutics. The proceeds from the private placement will be used for further clinical and pre-clinical development of vaccines, regulatory interaction with the Food and Drug Administration, the potential acquisition of additional clinical-stage products and general corporate purposes.

On Thursday, DOR's stock closed down $0.02 at $0.50.

Xethanol wraps deal

Xethanol Corp. has closed a private placement for $3 million as part of its stock-for-stock merger with Zen Pottery Equipment, Inc.

The proceeds from the offering will be used to expand Xethanol's capacity and capitalize on market, political, environmental and pricing trends for ethanol.

Details on the private placement were not available Thursday.

"The merger with Zen Pottery provides Xethanol with a public company platform to support future growth through co-located joint ventures with waste generators and processors and through acquisitions," said Xethanol's chief executive officer Christopher d'Arnaud-Taylor in a statement. "The concurrent stock placement also provides an important new source of funding for the continued commercialization of Xethanol's advanced biotechnologies to lower the cost of ethanol production from both corn and non-corn feedstocks."

After the private placement and the merger, Xethanol has about 13.1 million outstanding common shares.

Based in New York, Xethanol is a waste-to-ethanol conversion company.

Xenomics closes $2.8 million deal

Xenomics, Inc. said it sold 1.47 million units in a private placement for $2,866,500.

The company sold the units at $1.95 each. The units are comprised of one share and one warrant.

The five-year warrants allow for an additional share at $2.95 each.

"This funding will enable Xenomics to continue to achieve important strategic milestones in our efforts to develop and commercialize our proprietary technology platform for use in the life science marketplace," said the company's chief executive officer Randy White in a statement. "Our technology field of molecular diagnostics has the potential to directly impact millions of patients."

Xenomics, based in New York, is a molecular diagnostic company focused on developing proprietary technology platforms using urine samples to evaluate genetic markers of diseases and medical conditions. The proceeds from the private placement will be used to expand its research and the commercialization of its technologies.

Basic Empire raises $1 million

Basic Empire Corp. said it has closed a private placement of stock for $1 million as part of its merger with China Tailong Holdings Co., Ltd.

The company sold 590,283 shares at $1.6941 to accredited investors.

China Tailong Holdings is a manufacturer of compound liquid fertilizer products.

As a result of the merger, Basic Empire's stock skyrocketed $3.40 to $3.50 Thursday.

In the merger, 10,606,158 shares of Basic Empire were issued to Tailong's stockholders, representing 90% of the company's issued and outstanding shares.

The merged company will operate upon the current business plan of Tailong's subsidiary in China.

In the transaction, Yu Chang, the merged company's new chief executive officer, was named to Basic Empire's board of directors and other senior managers of Tailong were named as executive directors.

"We want to thank our financial advisor, Halter Financial Group, for their assistance with the going-public transaction," said Chang in a statement. "We believe that by being given the opportunity to access the U.S. capital markets we can capitalize on what we believe to be growth opportunities in our business."

Basic Empire is based in Midland, Texas. Tailong is based in Heilongjiang, China.

ACT stock up after offering announced

A day after it announced its $14 million private placement, ACT Teleconferencing Inc.'s stock got a boost.

The company's shares ended up $0.14 at $0.83 Thursday.

On Wednesday, the company said it would sell a convertible note. The conversion price is $1.05.

ACT is a Golden, Colo.-based audio, video and web-based conferencing products company.

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