Private placement volume remains flat; Napster plans $52.18 million offering

By Sheri Kasprzak

Atlanta, Jan. 21 - Private placement issuance remained mostly slow to end the week as the stock market continued to falter.

"Stocks are still down and it is still early in the year," said one market source. "I attribute low volume to those things."

The Dow Jones Industrial Average ended the week down 78.48 at 10,392.99; the Nasdaq composite was down 11.61 at 2,034.27 and the S&P 500 ended down 7.54 at 1,167.87.

But despite the overall low level of activity, heading up offerings in the United States was a large high-profile deal from digital music download company Napster Inc.

The company sold 7.1 million shares at $7.35 each for $52,185,000, according to a market source familiar with the deal.

Even though the company has already received agreements from some accredited institutional investors, the offering is not expected to close until Jan. 24.

"[It] depends," said one market source when asked if large offerings like Napster's are a rarity in the private placement market. "We see a lot of reverse inquiries, where investors call in looking for large blocks."

Napster, based in Los Angeles, provides music download services from the internet. The company plans to use the proceeds from the deal to launch its Napster To Go portable subscription product and to make potential acquisitions.

On Friday, Napster's stock closed down $0.38 at $7.98.

CytRx raises $21.3 million

CytRx Corp. has closed a private placement for $21.3 million.

The company sold 17,334,494 shares at $1.23 each to institutional investors.

Warrants for 8,667,247 shares at $2 each were also issued in the offering.

Rodman & Renshaw LLC was the placement agent in the deal.

"The completion of this financing will allow CytRx to focus on our planned phase II clinical trial for ALS in the second quarter of 2005, as well as to expand our small molecule, RNAi and DNA vaccine program in obesity, type 2 diabetes and viral diseases," said the company's president and chief executive officer Steven Kriegsman in a statement.

Based in Los Angeles, CytRx is a biopharmaceutical research and development company.

CytRx's stock closed down $0.13 at $1.47 on Friday.

Force Protection wraps deal

Force Protection Inc. sold series D preferred stock in a private placement for $15.8 million.

The company sold the preferreds to investors led by Palisades Master Fund.

The preferreds are convertible into common shares at $0.32 each and pay an annual dividend of 6%.

"This financing will provide us with the necessary working capital to support our operations and it will allow us to take advantage of the substantial growth opportunities present in our key business segments," said the company's vice president and chief financial officer Tom Thebes, in a statement.

"We are pleased with this investment led by Palisades Master Fund," said Force Protection's chairman, Frank Kavanaugh, in a statement. "This is an important step for the company's future. With this additional strength in our balance sheet, we can now focus on securing a competitive senior term debt line. We appreciate and have been particularly impressed by the efficient and cooperative manner with which Palisades has managed this transaction."

HPC Capital Management Corp. was the placement agent in the deal.

Based in Ladson, S.C., Force Protection manufactures armored vehicles used by the U.S. Armed Forces. The proceeds will be used for working capital.

The company's stock closed down $0.008 at $0.252 on Friday.

NIIT issues $10 million in convertibles

NIIT Ltd. received approval, the company said Friday, to issue $10 million in foreign currency convertible bonds.

The bonds will be issued to Intel Capital Corp., and will carry a five-year term and bear interest at 2.5% annually.

The bonds are convertible into shares at Rs.200 per share throughout the maturity of the bond.

Based in New Delhi, NIIT is an internet-technology company that provides education and training products.

The company's stock closed at Rs.371.55 on Jan. 19, its last trade.

Trestle closes upsized deal

Trestle Holdings Inc. wrapped the final tranche of a private placement for $4.55 million, $1.05 million more than initially planned.

In the second and last tranche, the company raised $2.55 million by selling 1,457,142 units at $1.75 each. The units include one share and one three-quarters share warrant.

The whole warrants allow for an additional share at $1.75 each.

On Dec. 27, the company announced its plans to raise $3.5 million in the offering and closed the first tranche for $2 million.

Trestle, based in Irvine, Calif., develops and sells digital imaging and telemedicine applications to life sciences companies. The proceeds from the private placement will be used for working capital, including the proposed acquisition of Interscope Technologies.

Trestle's stock closed up $0.30 at $2.35 on Friday.

mPhase raises $2.9 million

mPhase Technologies Inc. sold 14,467,500 units in a private placement for $2,893,500.

The company sold the units at $0.20 each. The units are comprised of one share and one warrant.

The warrant allow for an additional share at $0.25 each for five years.

mPhase, based in Norwalk, Conn., sells digital subscriber line equipment.

The company's stock closed up $0.10 at $0.42 on Friday.

Canadian offerings

Heading up Canadian offerings was an offering announced by Western Lakota Energy Services Inc.

The company plans to raise C$25.3 million by selling 5.5 million shares at C$4.60 each.

The deal is expected to close Feb. 8.

The offering is being conducted through a syndicate of underwriters led by Peters & Co. Ltd.

Based in Calgary, Western Lakota is an oil and natural gas drilling contractor. It plans to use the proceeds from the deal to partially fund Western Lakota's 2005 capital expenditure program. The remainder will be used for general corporate purposes.

On Friday, the company's stocks closed up C$0.05 at C$4.85.

Corridor plans C$5 million offering

Corridor Resources Inc. said it will head to the private placement market for C$5 million.

The offering includes 3,225,807 units at C$1.55 each. The units are comprised of one share and one half-share warrant.

The whole warrants allow for an additional share at C$1.90 each for one year.

Placement agent Jennings Capital Inc. has a greenshoe for up to 1,290,323 additional units at the same price and up to 1,764,706 flow-through shares at C$1.70 each.

The deal is expected to close in mid-February.

Corridor is a Calgary, Alta.-based oil and gas exploration company. The proceeds from the deal will be used for its ongoing exploration and development programs, including further exploration and development on the McCully property in New Brunswick. The remainder will be used for general corporate purposes.

Corridor's stock rounded out the week down C$0.06 at C$1.53.

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