Private placement volume surges as stocks improve; Xoma plans $60 million offering

By Sheri Kasprzak and Ronda Fears

Atlanta, Jan. 31 - Private placements got a boost Monday as the stock market made a recovery after a week of decline.

"There are a lot of deals out there today," said one market source. "Surprisingly, though, most of them are smaller deals. But volume is definitely improving. The stock market is key."

The Dow Jones Industrial Average ended the day up 62.74 at 10,489.94; the Nasdaq composite index closed up 26.58 at 2,062.41 and the S&P 500 edged up 9.91 to close at 1,181.27.

Heading up action was a $60 million convertible note offering from Xoma Ltd. The notes mature in seven years.

The notes were talked Monday with guidance for a 6.0% to 6.5% coupon and 22% to 28% initial conversion premium.

JPMorgan Securities is placement agent.

Market sources said the issue will be sold under Section 4(2) and, after pricing, trade under Rule 144A.

The deal was scheduled to price after close of market Tuesday.

The senior notes will non-callable for three years, then with a 150% trigger.

Holders have full dividend and takeover protection.

There is a $20 million greenshoe available.

Berkeley, Calif.-based Xoma, a biotech concern focused on treatments for immunologic and inflammatory disorders, cancer and infectious diseases, plans to use proceeds for general corporate purposes, including current research and development projects, new products or technologies, equipment acquisitions, general working capital and operating expenses.

Xoma shares closed Monday off a penny at $1.97. In after-hours trading news of the convertible offering sent the stock down by another 12 cents, or 6%.

CepTor closes upsized deal

CepTor Corp. raised $12 million in an upsized private placement.

The company sold 480 units at $25,000 each.

The units consist of one share of series A convertible preferred stock and a detachable common-share warrant.

The preferreds are initially convertible into 10,000 common shares at any time at $2.50 each. The preferreds pay dividends equal to the conversion price per share purchased.

The warrants allow for the purchase of a total of 5,000 shares at $2.50 each for three years.

There is a greenshoe option in the offering of 10%.

Brookshire Securities Corp. was the placement agent.

The deal was upsized from an initial $6 million offering of up to 240 units at the same price.

Based in Hunt Valley, Md., CepTor is a biopharmaceutical company that develops cell-targeted therapeutic products for neuromuscular and neurodegenerative diseases. The proceeds from the offering will be used for the pre-clinical development of its technologies and for working capital.

On Monday, CepTor's stock closed unchanged at $6.

Streicher raises $6.1 million

Streicher Mobile Fueling Inc. finished a private placement for $6.1 million.

The company sold 10%, five-year senior secured notes that require six semi-annual principal payments beginning Jan. 24, 2007 and a 40% balloon payment on Jan. 24, 2010.

The investors in the offering also received warrants for 866,200 common shares at $1.60 each for four years.

Philadelphia Brokerage Corp. was the placement agent in the deal.

"The $6.1 million financing provides cash for the Shank acquisition and additional working capital for the company to fund its continuing growth and operational improvements," said the company's chairman and chief executive officer Richard Gathright in a statement.

"The favorable terms of the financing, including the two-term moratorium on principal payments, will give the company flexibility in leveraging its cash flows for future expansion and the orderly disposition of its long-term debt. We will consider further capital-raising initiatives in order to meet the company's acquisition and business development plans."

Based in Fort Lauderdale, Fla., Streicher provides mobile fueling and fuel management services to businesses operating fleets of vehicles and equipment. The proceeds from the private placement will be used for the company's Shank Services acquisition and for working capital.

Streicher's stock closed unchanged at $1.75 on Monday.

Chembio wraps $5 million deal

Chembio Diagnostics, Inc. has closed a private placement for $5 million.

The company issued 100 shares of series B convertible preferred stock at $50,000 each to a group of investors.

The preferreds pay dividends of 9% annually and are convertible into common shares at $0.61 each.

The investors also received warrants for 7,786,960 shares at $0.95 each for five years.

Midtown Partners & Co., LLC was the placement agent in the offering.

"We are pleased to have completed this financing with such high-quality investors," said Chembio's president Lawrence Siebert, in a statement. "In evaluating financing alternatives and deal size, we always consider the balance of dilution and financial security. We believe that a prudent balance has been achieved with this round of financing.

"Proceeds from the placement will be used primarily for sales and marketing, research and development, manufacturing, intellectual property and working capital, all so that we can monetize our portfolio of rapid tests as quickly as possible."

Based in Medford, N.Y., Chembio develops and manufactures test products for HIV, tuberculosis and Mad Cow Disease.

On Monday, Chembio's stock closed unchanged at $0.62.

Flexpoint arranges offering

Flexpoint Sensor Systems Inc. will head to the private placement market with an offering of up to $4,725,000.

The company plans to sell up to 3.15 million units at $1.50 each. The units consist of one share and one warrant.

The warrants allow for an additional share at $3 each for two years, beginning six months after the deal closes.

Based in Draper, Utah, Flexpoint Sensor develops technologies requiring accurate measurement and deflection, acceleration and range of motion sensing. It plans to use the proceeds from the offering to develop its operations.

Flexpoint's stock closed up $0.02 at $1.90 Monday.

Golden Eagle raises $3.5 million

Golden Eagle International Inc. said it has made arrangements with one investor for the purchase of its $3.5 million private placement offering.

Brazilian investment group Polion do Brasil SA will buy, over eight months, 3.5 million shares of convertible preferred stock at $1 each.

The preferreds pay an annual dividend of 8% and may be converted into common shares, after a one-year holding period, at the greater of $0.10 each or 50% of the market price per share on the conversion date.

"We anticipate that these funds, one received, will allow us to cover current working capital requirements," said Golden Eagle's chief executive officer Terry Turner in a statement.

Based in Salt Lake City, Golden Eagle is a gold exploration and mining company. It plans to use the proceeds from the offering for working capital.

The company's stock closed up $0.01 at $0.07 Monday.

Cimetrix raises $2 million

Cimetrix Inc. closed a private placement for $2 million.

The company issued 2.5 million shares at $0.80 each to two investors.

"This capital infusion will be applied to several important areas of our growth plan, including accelerating development of new product initiatives and expanding our presence in Asian markets - particularly Japan," said Bob Reback, the company's president and chief executive officer in a statement.

"We are especially pleased that our new investors are strategic partners in that they share the same vision for growth and have a vested interest in our success in expanding Cimetrix's presence in the Japanese semiconductor space."

Salt Lake City-based Cimetrix develops factory automation software for the semiconductor and electronics industries. It plans to use the proceeds to accelerate the development of its new products and to expand its presence in the Asian markets.

On Monday, the company's stock closed up $0.01 at $0.61.

RCG closes deal

RCG Companies Inc. said it finished a private placement of secured promissory notes for $1,098,500.

The notes bear interest at 7% annually and are payable in one lump sum in six months. The maturity of the note may be extended.

Warrants for 549,250 shares at $1.25 each for three years were also issued in the offering.

RCG, based in Charlotte, N.C., operates travel and technology services companies.

The company's stock closed up $0.07 at $1.55 Monday.

Ceapro plans C$1 million deal

In Canadian action Monday, Ceapro Inc. said it will raise up to C$1 million.

The offering, which is not being brokered, includes up to 2.5 million units at C$0.40 each.

The units are comprised of one share and one warrant. The warrants allow for an additional share at C$0.45 each through June 30, 2005 and C$0.60 each after June 30, 2005 and through Nov. 30, 2005.

"I think any money a penny stock can get is fairly priced," said one market source.

Ceapro, based in Edmonton, Alta., is a biotechnology company focused on developing and commercializing organic products for medical, cosmetic and animal health uses. The proceeds from the private placement will be used to fund new product development for active ingredients and veterinary therapeutic products. The company will also use some of the proceeds to expand its line of veterinary products into North America, Europe and Asia.

On Monday, the company's stock closed unchanged at C$0.40.

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