Canada leads private placement activity; Allos closes $50 million deal

By Sheri Kasprzak

Atlanta, March 3 - As issuers in the United States faced lackluster stocks, much higher oil prices boosted private placement volume north of the border.

"There's really not much going on today," said one sell-side source in the United States. "Stocks are mixed, so issuers are sitting back and biding their time. I imagine things will pick up soon."

The Dow Jones Industrial Average closed up 21.06 to end at 10,833.03; the Nasdaq composite index was down 9.10 to close at 2,058.40 and the S&P 500 closed up 0.39 at 1,210.47.

In Canada, however, volume got a push from record oil prices, with oil rising $2.15 to settle at $55.20 per barrel.

"Oil is driving volume," said one Canadian sell-sider. "Prices are way, way up and energy companies are responding to that."

Nonetheless, leading PIPE news Thursday was a direct placement from a U.S. issuer, Allos Therapeutics, Inc. which brought a $50 million deal.

The company sold 2,262,443 shares of preferreds at $22.10 each to Warburg Pincus Private Equity VIII, LP.

The company also has the option to sell up to an additional $10 million preferreds before March 8.

Each share of the preferreds is exchangeable into 10 shares of common stock on or before the fifteenth-month anniversary of the closing date. If the preferreds remain outstanding on the first anniversary of the closing date, they will accrue dividends at 10% annually.

The preferreds are being sold under Allos' shelf registration.

"We welcome Warburg Pincus as a significant investor in Allos and to our board of directors," said Michael Hart, president and chief executive officer of Allos, in a statement. "We believe the proceeds from this financing will provide the necessary resources to complete our ongoing Enrich study and to advance our PDX and RH1 development programs."

Needham & Co., Inc. is the placement agent.

Based in Westminster, Colo., Allos is a biopharmaceutical company focused on treatments for cancer. The proceeds will be used to fund research and development activities, including the ongoing phase 3 trial of Efaproxyn for breast cancer.

On Thursday, the company's stock closed up $0.36 at $2.59.

eLinear details $12 million deal

eLinear, Inc. said it closed $12 million private placement earlier this week and released details on the offering Thursday.

The company sold convertible secured notes to five institutional investors.

The notes mature Feb. 28, 2008 and bear interest at Prime plus 75 basis points, with a 5.5% floor. The notes are convertible into common shares at $1 each. The conversion price resets with every $500,000 in conversions with a $1 floor.

"This is a very flexible and innovative financing in that as our company performs better and our stock price moves, the conversion price adjusts with it, effectively reducing our cost of capital and rewarding us for stock performance," said Ramzi Nassar, the company's chief strategy officer, in a statement. "The board of directors asked management to put in place such a facility that would act as a cushion to enhance our path into the future and to profitability."

Based in Houston, eLinear is a communications, security and compliance company providing integrated technology for IP telephony, network and storage infrastructure. The proceeds will be used for working capital and acquisitions.

On Thursday, eLinear's stock closed up $0.03 at $0.93.

Bio-Lok wraps $3.75 million deal

Bio-Lok International Inc. sold 5 million shares at $0.75 each in a private placement for $3.75 million in proceeds.

"We are very pleased with the level of interest and support that Bio-Lok has received and we are looking forward to working with a leading venture capital firm like Radius Venture," said Bio-Lok's chief executive officer Bruce Hollander in a statement. "With this transaction, Bio-Lok can deploy the level of sales and marketing resources necessary to expand its U.S. and global market presence."

Capitalink, LC was the placement agent.

Based in Deerfield Beach, Fla., Bio-Lok manufactures and distributes the Bio-Lok Precision Dental Implant System. The company plans to use the proceeds from the private placement to launch its Silhouette Laser-Lok dental implant system.

Bio-Lok's stock closed unchanged at $1.44 on Thursday.

Absolute prices C$3.12 million offering

Absolute Software Corp. announced its plans to raise C$3,125 million in a private placement.

The deal includes 2.5 million shares at C$1.25 each.

Underwriter Northern Securities Inc. has a greenshoe for up to 500,000 shares.

"It's about as good as you can get," said one market source. "No discount, so it's a great deal for them.

"I think it will go very well. The market seems to be responding well. Their stock is up today. I just think software companies have been doing well in general, so look to the sector for the reasoning behind it."

Absolute Software's stock closed up C$0.04 at C$1.29 Thursday.

Based in Vancouver, B.C., Absolute is a software company focused on computer theft recovery and secure asset tracking.

CareDecision raises $2.4 million

CareDecision Corp. raised $2.4 million in a private placement of series C convertible preferred stock.

The company sold 2,400 shares of the preferreds at $1,000 each to Mercator Advisory Group, LLC.

The preferreds are convertible into common shares at 80% of the market price of CareDecision's common stock.

"This funding provides the necessary resources to enable the company to exploit our aggressive, essential, even revolutionary opportunities inherent in our e-pharmacy strategy," said Robert Cox, the company's chairman, in a statement.

"The $2.4 million investment raise and its $2.5 million conditioned follow-on will serve the company's cash needs for acquisition capital for the foreseeable future.

"With the significant revenue streams that our drug distribution businesses are creating, which in 2005 may reach a $175 million annual run rate, we are now well-positioned to embark on our stated mission to serve America's 40 million uninsured and underinsured with life-preserving pharmaceuticals. We are extremely excited about the confidence our new strategic partners has demonstrated in our management team, and the validation this funding provides our unique business plan."

Based in Westlake Village, Calif., CareDecision develops handheld information systems and software for the healthcare industry. The company plans to use the proceeds for acquisitions.

The company's stock closed up $0.0001 at $0.0179 on Thursday.

Drugstore.com's stock up

A day after announcing the closing of a $26 million private placement, Drugstore.com's stock got a boost.

The company closed up $0.66 Thursday at $2.81 and up $0.04 in after-hours trading.

When the deal was first announced Wednesday, the company's stock closed down $0.14 at $2.15.

The company sold shares at $2.60 each.

Based in Bellevue, Wash., Drugstore.com is an online provider of health, beauty, vision and pharmacy products.

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