Oil companies get back into PIPE market; NovaDel Pharma closes $7.03 million deal

By Sheri Kasprzak

Atlanta, May 27 - After being absent from the PIPE market for several weeks, oil companies returned to the scene on Friday as oil prices rose ahead of the three-day weekend.

"We're about to head into a busy travel weekend, so that pushed oil, which in turn pushed energy stocks," said one market source. "That helps [issuance]."

Oil prices rose $0.84 to close at $51.85 per barrel on Friday ahead of the Memorial Day holiday.

"We've seen enough gains over the past few days to persuade energy companies back into the market," said another sell-sider. "With the upcoming holiday, I think there may be enough momentum from oil prices to keep issuers out there at least for the short term."

Las Vegas-based Cheetah Oil & Gas Ltd. closed a $6 million deal and Houston-based EnerGulf Resources Inc. announced its plans to raise $1.05 million in a private placement.

Moving to the pharmaceutical sector, NovaDel Pharma Inc. led private placement news to wrap up the week with the closing of its $7,035,000 stock offering.

The company issued 6.7 million shares at $1.05 each to institutional investors.

NovaDel also issued warrants for 2.4 million shares at $1.30 each for five years.

"We are very pleased to have consummated this financing, and are also pleased with the addition of ProQuest Investments to our shareholder base," said Gary Shangold, the company's president and chief executive officer, in a statement.

"We believe that it represents a major vote of confidence in our lingual spray technology and our ability to execute our business plan. The additional funds will allow us to advance the clinical development of our un-partnered proprietary lingual spray products toward pivotal trials and [New Drug Application] submissions under 505(b)(2)."

After the deal was announced Friday morning, NovaDel's stock edged up $0.02 to close at $1.20.

Paramount BioCapital, Inc. was the placement agent.

Based in Flemington, N.J., NovaDel is a pharmaceutical company that produces oral sprays and gelatin capsules. It plans to use the proceeds to advance the clinical development of its lingual spray products.

GSE's $2 million offering

GSE Systems, Inc. wrapped a $2 million private placement Friday in a deal left over from the surge of tech companies with PIPE deals earlier in the week.

Dolphin Direct Equity Partners, LP bought an 8% senior subordinated secured convertible note. The note, which is due in March 2009, is convertible into 1,038,961 common shares at $1.925 each.

GSE also issued warrants for 380,952 shares, exercisable at $2.22 each for seven years.

"I am very pleased that Dolphin has decided to make this investment in the company," said GSE's chief executive officer John Moran in a statement. "We consider this a first step with Dolphin and are currently in discussions with them to develop a long-term financial strategy that supports our growth and future goals."

Based in Columbia, Md., GSE provides real-time simulation and training products to the energy, manufacturing and government sectors. The proceeds from the private placement will be used for working capital.

On Friday, GSE's stock closed unchanged at $1.79.

EnerGulf plans $1.05 million deal

Back to the energy sector, EnerGulf Resources has put together an offering of units for up to $1.05 million.

The deal includes up to 1.5 million units at $0.70 each.

The units consist of one share and one warrant. The warrants are exercisable for an additional share at $1.10 each for one year.

In connection with the private placement, EnerGulf will cancel 2 million of its issued and outstanding shares held by subsidiary Energulf Colombiana de Petroleos Ltd. Those shares will be returned to treasury.

"The cancellation of 2 million issued and outstanding shares coupled with this financing of 1.5 million units further demonstrates our commitment to effective and prudent capital structure management," said Jeff Greenblum, EnerGulf's chairman, in a statement.

"These moves optimally position our capital structure for future transactions and provide us with maximum flexibility to continue the rapid development of our business plan with minimal dilutive effects to our shareholders."

Based in Houston, EnerGulf is an oil and natural gas exploration company.

EnerGulf's stock didn't budge Friday to close at $0.75.

Orko Gold upsizes deal to C$1.2 million

In Canada, Orko Gold Corp. took advantage of a surge in gold prices, according to one market source, and increased to C$1.2 million its previously announced C$1 million private placement of units.

The upsized offering includes 4.8 million units at C$0.25 each.

The units include one share and one half-share warrant. The whole warrants allow for an additional share at C$0.30 each for two years.

The deal was first announced May 19, as a C$1 million offering comprised of 4 million units under the same terms.

"Gold prices have improved significantly since this deal first priced," said one market source in Canada. "They obviously realized this and decided to try for more. I think it's a good thing that they did. If they need the capital, I think it was wise to increase the size now that gold is going for more."

Based in Vancouver, B.C., Orko is a gold exploration company. It plans to use the proceeds for drilling on its Mexican property and for working capital.

At close Friday, Orko's gold had lost a penny to end at C$0.28.

HealthRenu's stock dives

A day after announcing its $10 million equity line from Cornell Capital Partners LP, HealthRenu Medical Inc.'s stocks took a dip Friday.

The company's stock closed down $0.13, or 38.24%, to end at $0.21.

On Thursday, when the equity line was first announced, HealthRenu's stock gained $0.06, or 21.43%, to close at $0.34.

HealthRenu will sell shares to Cornell at 97% of the lowest volume weighted average price for five trading days before notice of draw.

The full details of the standby equity distribution agreement were revealed Friday in a form 8-K from the Securities and Exchange Commission, though the deal was announced without details on Thursday.

Based in Houston, HealthRenu is a healthcare company focused on skin and wound-care products.

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