U.S. volume remains strong; BioSphere receives $8 million in private placement

By Sheri Kasprzak

Atlanta, Nov. 4 - Volume in the United States' private placement market, still riding on the results of Tuesday's election, remained strong.

"I believe the market is still enjoying a boost because of the election," said one sell-side source. "Obviously, the market reacted very well to the results and I think the market is just reacting well because of that."

BioSphere Medical Inc. led action Thursday with news that it received agreements from investors for $8 million in a private placement

The company will sell shares of its series A convertible preferred stock and warrants for 400,000 shares of common stock, exercisable for five years, at $4 per share.

The stock may be converted into common shares at any time at $4. The closing stock of the company's common stock was $2.64 on Nov. 3.

Martin Joyce, chief financial officer for BioSphere, said in an interview Thursday that the company has not decided exactly how many shares of the series A convertible preferred stock will be sold in the deal or at what price.

"We're not able to say," Joyce said. "We're still tinkering with it."

The deal is expected to close Nov. 8. At that time, Joyce said, additional details will also be released.

Joyce said his company is happy with the way the deal priced and said he felt it was in line with the market.

BioSphere, based in Rockland, Mass., is a medical device company. It plans to use the proceeds from the deal for general corporate purposes, including working capital and capital expenditures.

On Thursday, the company's stock closed up $0.11 at $2.75.

Wet Seal has sealed lips on notes

After news late Wednesday that it plans to issue $40 million in convertible notes, retailer The Wet Seal Inc. remained mum about the deal Thursday.

Helen Rotherham of Wet Seal said the company is not making any public statements about the deal.

"We haven't specified yet what we plan to do with the proceeds," Rotherham said in an interview.

Rotherham said the company decided to issue the convertible notes after reviewing alternative methods of financing.

"It's really hard to say what the company's motivation for this deal might be," said one sell-sider familiar with the deal. "They've had trouble with capital in the past, so it could be to boost their working capital."

On Wednesday, Wet Seal said it was considering a transaction with S.A.C. Capital Management LLC in which it would issue the $40 million of notes, convertible into common stock at $1.50 and due in seven years.

The deal, according to Wet Seal's statement, is expected to close in late December or early January, subject to board and shareholder approval. Rotherham would not specify when the company's board will be reviewing the deal.

Based in Foothill Ranch, Calif., Wet Seal is a women's apparel retailer. Its stock closed down $0.15 at $1.45.

Elite wraps $6.6 million deal

Elite Pharmaceuticals said Thursday it closed up the third tranche of a $6.6 million private placement.

The final tranche included the sale of 18,150 shares of series A preferred stock at $14.70 per share for a total of $266,805. In the last tranche, warrants for up to 181,500 shares were issued at $1.84 per share for five years.

In the first tranche, closed Oct. 12, the company issued 379,121 shares of series A preferred stock at $12.30 per share. Each investor received two common stock purchase warrants for each share of preferred stock, good for five years at a strike price of $1.54.

On Oct. 18, the company finished the second tranche for $1.67 million. That tranche included the sale of 119,286 series A preferred shares at $14 per share. Warrants were also issued for five shares each for up to 1,192,860 shares of common stock at $1.75.

All told, the company sold 516,558 shares of preferred stock, which are convertible into 10 shares of common stock each, or an aggregate of 5,165,580 shares of common stock.

"The proceeds of this offering with contribute materially to our efforts to accelerate the development of our portfolio of pain products as well as our other controlled release products utilizing our proprietary oral drug delivery systems and abuse resistance technology," Elite chairman and chief executive officer Bernard Berk said in a statement.

The placement agent in the deal was Indigo Securities LLC.

Investors in the deal included S.A.C. Capital Associates, The Marlin Funds, Jess Morgan & Co. and Valor Capital Management LP.

Elite Pharmaceuticals is based in Northvale, N.J., and specializes in oral controlled-release products. The funds raised from the private placement will be used to develop the company's line of pain products. Elite's stock closed unchanged at $1.70 Thursday.

Granite City closes $6.6 million deal

Granite City Food & Brewery Ltd. said Thursday it wrapped up the final closing of a $8.5 million private placement for $6.6 million.

About 2,022,253 shares were sold at $3.25 per share and included one warrant for every 2.5 shares. The warrants have a five-year term and are exercisable at $5 per share.

In September, the company closed the $1.9 million portion of the deal.

Based in Minneapolis, Granite City operates a restaurant chain. The proceeds from this financing will be used as working capital to fund the expansion of its chain.

On Thursday, the company's stock closed up $0.08 at $5.13.

Cyberkinetics receives $6 million

Cyberkinetics Neurotechnology Systems Inc. said Thursday it has received purchase agreements for a $6 million private placement of stock and warrants.

The deal includes two million shares at $3 with one purchase warrant for up to 660,000 shares at $6.

Rodman & Renshaw will serve as placement agent in the deal. Neither Rodman & Renshaw nor the company returned requests for additional information on the deal Thursday.

Based in Foxborough, Mass., Cyberkinetics is a neurotechnology company. It plans to use the proceeds from the financing for the clinical development of its first commercial product candidate.

On Thursday, Cyberkinetics' stock closed down C$0.79 at C$4.10.

Canadian deals

Capstone Gold Corp. led Canadian private placement action Thursday with a C$8.5 million in a private placement.

The deal, offered on a best-efforts basis through a syndicate of placements agents led by Pacific International Securities Inc., consists of 10 million units of one share and one half-share purchase warrant at C$0.85. The securities are subject to a four-month hold.

The whole warrants are exercisable for three years from the closing date at C$1.25.

The agents in the deal have the option to increase the size of the offering by 30% any time up to closing.

Based in Vancouver, B.C., Capstone Gold is a gold exploration company. It plans to use the proceeds from the financing for the development of existing properties in Mexico, exploration and general corporate purposes.

Capstone's stock closed down C$0.06 at C$0.83 Thursday.

Sawtooth enters market

Sawtooth International Resources Inc. will enter the private placement market with a C$2.094 million offering, the company said late Wednesday.

The offering consists of up to 800,000 shares at C$1.08 and up to one million flow-through common shares at C$1.23.

Sawtooth, based in Calgary, Alta., is an oil and gas company. It plans to use the proceeds from the private placement to fund its current development and drilling program in the Redwater/Fort Saskatchewan area.

Sawtooth's stock closed at C$1.14 on Nov. 1, its last trade.

Noront enters market with C$2 million deal

Noront Resources Ltd. said Thursday it will enter the private placement market with a C$2 million offering.

The deal consists of flow-through shares and units of one non flow-through common share and one half-share warrant at C$0.55 per unit or share in some combination for a total of C$2 million.

The whole warrants in the deal allow for the purchase of an additional non flow-through share at C$0.75 for 18 months.

Dundee Securities Corp. and Canaccord Capital Corp. will serve as placements agents in the deal.

The Toronto-based diamond exploration company plans to use the proceeds from the units for general working capital and the proceeds from the non flow-through units will be used for exploration at the Windfall Lake project in Quebec.

The company's stock closed up C$0.13 at C$0.64.

Zeolite to raise C$1.5 million

Zeolite Mining Corp. said Thursday it has wrapped up a C$500,000 private placement and will enter the market again to raise an additional C$1.5 million.

The restricted shares in the C$500,000 deal were sold at C$1 per share. The company hopes to raise the C$1.5 million under the same terms within 45 days.

Based in Calgary, Alta., Zeolite produces handsets for cell phone users. It acquired Global National Communications Corp. in late September.

The company plans to use the proceeds from the financing to expand its production of cell phone handsets.

Kodiak to offer C$1 million

Kodiak Energy Services Ltd. said Thursday it will lower the subscription price on its non-brokered C$200,000 private placement and will offer an additional C$1 million in the deal under the amended terms.

The price per unit will be lowered to C$0.40 from the C$0.36 when it announced the C$200,000 deal on Sept. 22. Each unit consists of one share and one non-transferable share purchase warrant, exercisable for two years at C$0.50 per share. The warrants were initially exercisable at C$0.60 per share.

Under these amended terms, Kodiak plans to raise an additional C$1 million.

Also, Kodiak has arranged for several of its shareholders to sell up to 1.1 million free-trading shares at C$0.40 per share in order to partially fund the private placement. These market trades are expected to be complete by Nov. 5 and Nov. 12 with the private placement of C$1.2 million closing shortly after.

Based in Calgary, Alta., Kodiak is an oilfield and environmental services company. It plans to use the proceeds from the amended private placement for acquisitions of assets, properties or existing businesses.

Kodiak's stock closed C$0.45 on Nov. 1, its last trade.

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