Private placement volume stalls; Discovery Laboratories plans $26.5 million offering

By Sheri Kasprzak

Atlanta, Feb. 18 - Private placement volume fell flat at the end of the week, despite mostly higher stocks.

"The only thing I can really say is that sometimes issuance just trails off at the end of the week," said one sellside source. "Stocks were a little off earlier today, but there's nothing else that would really indicate that conditions were bad for issuance."

The Dow Jones Industrial Average made a comeback Friday from losses earlier in the day to gain 30.96 and close at 10,785.22; the Nasdaq composite index lost 2.72 to end at 2,058.62, and the S&P 500 edged up 0.84 to close at 1,201.59.

Despite higher oil prices, Canadian volume also remained relatively low Friday, according to sources there.

Oil gained $0.81 to close at $48.35 per barrel on Friday.

"There's really nothing I can point to," said one Canadian market source when asked why volume was off Friday. "There were some smaller deals out there today from oil companies."

Leading news Friday was a $26.5 million direct placement from Discovery Laboratories Inc.

The offering includes 4.61 million shares at $5.74 each sold to institutional investors.

S.G. Cowen & Co. is the placement agent in the offering.

The shares are being sold through Discovery's shelf registration.

As a condition of the offering, Discovery will not draw down upon its $12 million equity line from Kingsbridge Capital Ltd. for 90 days after the offering or draw more than $5 million for 90 days thereafter.

Discovery, based in Doylestown, Pa., is a biopharmaceutical company focused on respiratory disorders.

On Friday, Discovery's stock closed down $0.37 at $6.12.

Smith Micro closes $22.4 million deal

Smith Micro Software Inc. finished up a $22.4 million private placement, the company said. The offering included 3.5 million shares at $6.40 each.

C.E. Unterberg, Towbin LLC was the placement agent in the offering.

Based in Aliso Viejo, Calif., Smith Micro develops and markets wireless communication, broadband, eCommerce and utility software products. The company plans to use the proceeds from the private placement for the expansion of its product and customer base and for potential acquisitions.

On Friday, Smith Micro's stock closed down $0.73 at $6.75.

North American Tungsten plans deal

North American Tungsten Corp. Ltd. said it will raise up to C$3.75 million in a non-brokered private placement.

The offering includes up to 15 million units at C$0.25 each sold to insiders and private investors.

The units are comprised of one share and one half-share warrant. The whole warrants allow for an additional share at C$0.30 each for one year.

"I think most mineral companies are doing well in the stock market these days," said one market source. "I'm not sure exactly how good the tungsten market is, but I do know that minerals and resources in general have been very strong lately."

Separately, the company said it will not be proceeding with an offering of up to 37.5 million units through Union Securities Ltd. announced in July 2004.

Based in Vancouver, B.C., North American Tungsten acquires, develops and mines minerals, particularly tungsten-related minerals. The company plans to use the proceeds from the offering to fund a plan of compromise and arrangement and to fund current payables. The remainder will be used for working capital.

Cassidy to raise C$1.8 million

Cassidy Gold Corp. announced its plans to raise C$1.8 million in a non-brokered offering Friday.

The company plans to sell 3 million units at C$0.60 each. The units are comprised of one share and one half-share warrant. The whole warrants allow for an additional share at C$0.70 each for one year.

"It looks good to me," said one market source. "Gold seems to be the market to be in right now and so I would point to the sector for why this deal is priced well."

Based in Kamloops, B.C., Cassidy Gold is a gold exploration and development company. The proceeds will be used for exploration on its projects in Guinea, West Africa. The remainder will be used for working capital.

Cassidy's stock closed unchanged at C$0.66 on Friday.

Liquor Stores stock drops

A day after announcing its plans to raise C$30,012,000 in a private placement, Liquor Stores Income Fund's stock took a hit Friday.

The company's stock closed down C$0.26 at C$16.66 on Friday. On Thursday, after the offering was announced, the company's stock had gained C$0.42 to close at C$16.92.

The company plans to sell trust units at C$16.40 each.

Based in Edmonton, Alta., Liquor Stores Income Fund is a liquor store operator.

Input/Output suffers losses

After closing a $30 million private placement earlier this week, Input/Output Inc.'s stock continued to suffer losses.

On Friday, Input/Output lost $0.35 to close at $6.20. On Thursday, the company's stock closed down $0.41 at $6.55, and on Wednesday, after the closing was announced, the company's stock gained $0.05 to close at $6.96.

The company sold convertible preferred stock with a conversion price of $7.869 each.

Based in Houston, Input/Output provides seismic services.

Linear Gold closes down

After wrapping a C$25 million private placement on Wednesday, Linear Gold Corp.'s stock dropped Friday.

Linear Gold lost C$0.07 to close at C$7.77 Friday. On Thursday, the company's stock closed up C$0.05 to end at C$7.84, and on Wednesday, after the company closed the offering, its stock lost C$0.01 to close at C$7.79.

Linear Gold Corp. saw gains in its stock Thursday, a day after wrapping up a C$25 million private placement.

The company sold units at C$7.75 each.

Linear, based in Halifax, N.S., is a gold exploration and acquisition company.

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