First Albany to sell $50 million in stock; Contango secures $30 million from PIPE

By Sheri Kasprzak

New York, May 14 - First Albany Cos. Inc. grabbed PIPE headlines to kick off the week, penning an agreement for a $50 million stock sale with MatlinPatterson Global Opportunities Partners II.

The news of the agreement and an associated change of management at the firm sent its stock up 15.62% on the day, or 25 cents, to settle at $1.85 (Nasdaq: FACT). The stock gained another 2.37 cents in after-hours activity.

The stock got off to a positive early start, putting on 6.88% by 8:30 a.m. ET.

MatlinPatterson has agreed to buy 33,333,333 shares at $1.50 each, a 6.25% discount to the company's $1.60 closing stock price on Friday.

The deal is expected to wrap up Aug. 1 and once the deal does close, MatlinPatterson will be First Albany's majority shareholder.

Freeman & Co. Securities LLC was the placement agent.

Connected to the deal, Lee Fensterstock is the company's new chairman and chief executive officer and Peter McNierney, the company's current president and CEO will become president and chief operating officer.

"We see a significant opportunity to combine our financial capital with the human capital of First Albany to create a world-class investment bank serving emerging-growth companies and their investors," said Mark Patterson, MatlinPatterson's chairman, in a statement.

"This transaction will complete a year of restructuring and repositioning of the firm," said McNierney, also in a news release.

"I look forward to working with Lee, MatlinPatterson and our employee partner team to grow the company and realize its full potential."

Proceeds will be used for growth.

New York-based First Albany is an investment bank that serves the institutional market, state and local governments and the corporate middle market.

Contango to raise $30 million

Over in the energy sector, Contango Oil & Gas Co. plans to complete a $30 million offering of series E convertible preferred stock.

A group of private investors agreed to purchase the 6% preferreds on May 17. The preferreds are convertible at $38.00 each, an 8.8% premium to the company's $34.90 closing stock price on Friday.

On Monday, the stock gained $1.30 to end at $36.20 (Amex: MCF).

Energy Capital Solutions, LP and Pritchard Capital Partners LLC were the placement agents for the offering.

Proceeds will be used to repay $15 million in outstanding debt from the company's $30 million term loan and to fund offshore Gulf of Mexico deep shelf exploration.

"The $28.8 million net proceeds of this offering will be used to pay off the $15 million in debt outstanding from the company's $30 million term loan agreement, to fund the company's offshore Gulf of Mexico deep shelf exploration program and our Arkansas Fayetteville Shale play," said Contango's CEO Kenneth Peak in a news release.

"Our $13.8 million of cash on hand together with our $30 million of available borrowing capacity under our line of credit leaves us in a strong capital position."

Houston-based Contango is an oil and natural gas exploration company.

Diamond Discoveries' equity line

In other resources news, Diamond Discoveries International Corp. obtained a $10 million equity line of credit with Dutchess Private Equities Fund Ltd.

Dutchess may buy shares of Diamond at 93% of the lowest closing bid price for the five consecutive trading days immediately after notice of a draw.

There is a per-draw limit of either $250,000 or 200% of the average daily volume of the company's stock for the 10 trading days before a draw.

Proceeds will be used for diamond exploration.

The stock closed unchanged at $0.01 on Monday (OTCBB: DMDD).

"This financing works very well with a company like Diamond Discoveries," said director Tony Sciacca, in a statement.

"We require capital in order to aggressively pursue our diamond exploration activities. The Dutchess financing provides the flexibility of drawing funds in conjunction with the approved work programs recommended by Harrison Cookenboo, Ph.D., P.Geo., senior associate geologist of Watts, Griffis and McOuat, a firm of consulting geologists and engineers of Toronto, Ont."

Sciacca went on to say in the statement that the funds allow the company to earn up to a 50% interest in an option agreement with Tres-Or Resources Ltd. on their Notre Dame du Nord-Quebec properties.

New York-based Diamond Discoveries is a diamond exploration company.

Ener1 raises $2 million

Elsewhere, Ener1 Group, Inc. wrapped a $2 million offering of 10% convertible debentures.

The debentures, due May 10, 2008, are convertible into 8 million shares at $0.25 each. The debentures were sold to an institutional hedge fund.

The investor also received warrants for 4.8 million shares, exercisable at $0.30 each for five years.

The company is required to use $1.6 million of the proceeds for subsidiary Ener1, Inc. within 30 days of closing.

"Ener1 has continued to show that sophisticated financial institutions want to invest in the future of our alternative energy technology company," said vice chairman Charles Gassenheimer, in a statement.

"We appreciate the confidence that these investors have in our business and management team."

The stock remained unmoved at $0.28 (OTCBB: ENEI).

Located in Fort Lauderdale, Fla., Ener1 Group develops lithium ion batteries for hybrid electric vehicles. The company also makes fuel cells and nanotechnology-based materials and manufacturing processes.

US Geothermal plans C$15 million deal

Moving to the Canadian market, US Geothermal Inc. negotiated the terms of a C$15 million private placement.

The deal includes up to 6,818,182 shares at C$2.20 each. The share price is a 20.3% discount to the company's C$2.76 closing stock price on Friday.

The offering will be placed through a syndicate of underwriters, which has a greenshoe for up to 2,272,718 shares.

The deal is set to close June 5 and proceeds will be used for working capital.

The stock fell by 7 cents on Monday to close at C$2.69 (TSX Venture: GTH).

Toronto-based US Geothermal develops geothermal power projects in Idaho.

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