Jameson Inns prices $35 million convertible note deal; PIPE volume jumps on early drop in oil

By Sheri Kasprzak

New York, Sept. 29 - Jameson Inns, Inc. led another high-volume session for private placements, announcing its plans to raise $35 million in a convertible note offering.

The Atlanta-based hotel operator said it plans to repay floating-rate mortgage debt maturing in 2005 and 2006 from proceeds from the offering.

The 7% senior subordinated convertible notes mature on Sept. 30, 2010 and are convertible into common shares at $2.77 each.

Beginning Oct. 1, the company will have $107.1 million in outstanding mortgage debt maturing in 2005 and 2006.

As of Aug. 1, the company had 57,412,310 outstanding common shares.

The offering was announced Thursday afternoon, and Jameson's stock slipped $0.08 to close at $2.18 before gaining a penny in after-hours trading.

JMP Securities Inc. is the placement agent.

"We are very pleased with this transaction," said Thomas Kitchin, Jameson's chief executive officer, in a statement. "It is an important financing that extends current maturities and reduces our exposure to rising interest rates."

Kitchin could not be reached by Thursday evening for additional comment on the deal.

As to its earnings, Jameson's net income more than doubled over the second quarter of 2004.

For the quarter ended June 30, 2005, the company reported net income of $2,454,296, up from net income of $1,112,565 for the corresponding quarter of 2004.

In the broader PIPE market, market sources said volume got a boost Thursday and Wednesday from sinking oil. However, because oil prices recovered Thursday afternoon, that may change as the week winds down.

"It'll probably trail off a bit tomorrow [Friday]," said one market source of volume. "Oil has been trending down the past few sessions, so we're seeing an influx of issuers doing deals they were trying to get when oil was way up there."

Oil prices crept back up after sinking early in the day, gaining $0.44 to end at $66.79 per barrel. Crude oil prices may continue to rise for a little while, according to another sellside source, as uncertainty lingers over when refineries based out of the Gulf Coast region will return to business following the two recent hurricanes.

"No one's sure when things will be back up to the way they were before," said the source. "What you're seeing right now is a load of things that [issuers] wanted to do before oil started rising, probably a couple of weeks ago. Yesterday oil was down and for the better part of today it was down so it became a more appealing time to price."

Oil slipped $0.75 on Wednesday to close at $65.07.

Lipid Sciences raises $7.2 million

Heading to the biotech sector, Lipid Sciences, Inc. completed a $7,241,990 stock offering Thursday.

The company sold 2,430,198 shares at $2.98 each to institutional investors. The price per share is a 15% discount to the average of the daily volume-weighted average price on each of the five trading days before Sept. 28.

Lipid had 24,921,763 outstanding common shares as of July 31.

The investors received warrants for 0.3 of a share for every share purchased. The warrants are exercisable at $4.20 each for five years.

The investors also received additional investment rights for half a share for each share purchased. The AIRs are exercisable at $3.73 each until 90 days after the registration statement is declared effective.

The offering was announced Thursday morning, and the company's stock dove 13.9%, or $0.50, to end at $3.10.

As for the company's earnings, Lipid Sciences' net losses have improved over the second quarter of 2004.

For the quarter ended June 30, 2005, the company reported a net loss of $2.63 million, down from a net loss of $3,562,000 for the same quarter of 2004.

Based in Pleasanton, Calif., Lipid Sciences develops systems to remove cholesterol and other fats from the blood.

Mineral offerings from Canada

Mineral exploration companies dominated Canadian private placements on Thursday with a C$45 million offering from International Uranium Corp. leading the bunch.

Vancouver, B.C.-based International Uranium said it plans to sell up to 6 million shares at C$7.50 each.

Proceeds will be used to reopen mines in the United States, and the remainder will be used for working capital.

After the deal was announced Thursday morning, the company's stock fell C$0.05 to close at C$7.60.

Another Vancouver-based mineral company, East Asia Minerals Corp., also priced a sizable offering Thursday.

The company intends to sell up to 10 million units at C$1.25 each for C$12.5 million.

The units consist of one share and one half-share warrant. The whole warrants allow for the purchase of another share at C$1.75 each for two years.

A syndicate of placement agents led by Pacific International Securities Inc. has an over-allotment option for up to 2 million units.

The deal is expected to close Oct. 27.

Proceeds will be used for exploration on the company's Mongolian properties and for general corporate purposes.

East Asia's stock gained C$0.04 to close at C$1.45 Thursday.

Toronto's First Nickel Inc. also priced a private placement, a C$6 million stock deal.

The offering includes 4,615,385 flow-through shares at C$1.30 each.

The deal was announced Thursday morning. By day's end, the company's stock had gained 11.61%, or C$0.13, to finish at C$1.25.

MGI Securities Inc. is the placement agent.

Proceeds will be used for exploration on its properties in the North Range of the Sudbury Basin, its Landore property and its Dundonald property.

Stratic's C$30.08 million deal

Moving to the energy sector, Stratic Energy Corp. priced and later upsized a private placement for C$30.08 million.

The company plans to sell 33,422,233 shares at C$0.90 each.

Thursday morning, the deal was announced as a C$20 million offering of 22,222,222 shares under the same terms.

A syndicate of underwriters led by GMP Securities Ltd. will be placing the deal, which is scheduled to close Oct. 13.

Proceeds from the offering will be used for exploration and development on the company's oil and natural gas properties. The rest will be used for working capital.

The company's stock lost C$0.05 to close at C$1.02.

Based in Calgary, Alta., Stratic Energy is an oil and natural gas exploration company.

Fairfax Financial stock rises

Fairfax Financial Holdings Ltd.'s stock ended the day slightly higher after announcing a $300 million direct placement earlier this week.

The company's stock settled up $5.20 to close at $173 Thursday.

On Wednesday, when the offering was first announced, the company's stock gained $5.05, or 3.1%, to close at $167.80.

The Toronto-based insurance and reinsurance company will issue shares at $162.75 each to institutional investors on Oct. 12.

The shares will be sold under the company's shelf registration.

Fairfax was hit with a subpoena earlier this month seeking documents related to the company's securities, compensation for sales, trading volumes and share prices. The company is being investigated by the Securities and Exchange Commission to determine if it sold products that are not insurance-related in an effort to boost earnings.

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