Dyadic secures $13.04 million from stock sale; China Shen Zhou to close $28 million PIPE

By Sheri Kasprzak

New York, Nov. 20 - Heading up PIPE action to kick off the week was a $13,043,160 private placement of stock announced by Dyadic International, Inc.

In the broader market, one sellsider said he feels volume could be relatively strong this week, in spite of the holiday.

"I think we'll see a bit of activity between now and Wednesday," he said. "You can expect a certain number of [issuers] looking to get stuff done before the holiday. Others are just bound to wait until Thanksgiving is over, but then we'll see [volume] pick up again ahead of Christmas. Between now and the end of the year, I think it's safe to say things will pick up in a big way."

Back to the Dyadic offering, company chief executive officer Mark Emalfarb said in an interview Monday that the company conducted the private placement as a quick, private way to raise funds.

"It seemed to be the best way to help us grow our business instead of having to do an IPO or do a roadshow, which would take more time," he said.

In the offering, the company will issue 2,787,000 shares at $4.68 each to a group of institutional investors. The investors will get warrants for 557,400 shares, exercisable at $6.33 each for three years. The price per share is a 10.8% discount to the company's $5.24 closing stock price on Friday.

On Monday, the stock advanced by a penny to close at $5.25 (Amex: DIL). The volume of Dyadic shares traded Monday almost doubled with 100,100 shares traded compared with the average 58,679 shares.

"I thought they should pay a premium," said Emalfarb in the interview. "But I think the pricing worked out for both the investors and for us."

Cowen & Co., LLC was the placement agent for the offering.

Proceeds for expansion

"The net proceeds of approximately $12.3 million will greatly assist us in expanding our C1 host technology development program that is fundamental to our businesses and, in particular, is anticipated to aid in the development of large-scale enzyme production systems and manufacturing processes for use in the production of abundant low-cost fermentable sugars from biomass," Emalfarb said in a statement released Monday morning.

"Additionally, the net proceeds are anticipated to help us strengthen the product pipeline for our enzyme business, accelerate the commercial launch of new products in pulp and paper, animal feed and other areas and expand research and development infrastructure as well as our sales and marketing efforts."

The offering comes on the heels of Dyadic's $10 million stock deal with Abengoa Bioenergy Co. as part of a research and development agreement between the two. Abengoa will assist Dyadic in developing enzyme production systems.

The company has conducted private placements in the past.

In November 2004, the company issued 7,580,313 shares at $3.33 each for proceeds of $25,242,000 with The Pinnacle Fund LP, Mercantile Capital Group, Knott Partners and Crestview Capital Funds.

Based in Jupiter, Fla., Dyadic makes biological products using fungal strains to produce enzymes and other biomaterials to convert agricultural products and waste products to ethanol and other fuels.

China Shen Zhou's placement

Elsewhere in private placement action, Beijing's China Shen Zhou Mining & Resources, Inc. will close a $28 million private placement of senior secured convertible notes early next month.

Citadel Equity Fund Ltd. plans to buy 6.75% notes due 2012. The notes are convertible into common shares at $3.20 each, a 14.3% premium to the company's $2.80 closing stock price on Nov. 16.

American Eastern Securities, Inc. was the placement agent.

The deal is expected to close Dec. 10.

Proceeds will be used to purchase a mine in Kyrgyzstan. The rest will be used for expenses related to existing and new mine properties in China and for working capital.

"China Shen Zhou is extremely pleased to gain Citadel as a new investor and long-term partner," said China Shen Zhou's CEO Yu Xiao-Jing in a news release. "We recognize Citadel as one of the preeminent providers of growth capital in the world and consider it a privilege to work with them. China Shen Zhou is now poised to move rapidly in developing its mining operations and we believe Citadel is the best-suited finnacing partner with whom to move forward."

On Monday, the stock remained unchanged at $2.75 (OTCBB: CSZM).

Based in Beijing, China Shen Zhou is a mineral exploration company focused on fluorite, zinc, lead, copper and other non-ferrous metals in the People's Republic of China.

CounterPath's $4 million deal

After announcing its plans to raise $4 million in an offering of convertible debentures Monday morning, CounterPath Solutions, Inc.'s stock edged up by a penny, or 2.44%, to end at $0.42 (OTCBB: CTPS).

Investors, led by KMB Trac Two Holdings Ltd., plan to buy 5% debentures. The debentures mature in two years and are convertible at $0.40 each.

The investors will receive warrants for 5 million shares, exercisable at $0.80 each.

The proceeds will be used for product marketing and development, as well as the development of additional products.

Vancouver, B.C.-based CounterPath is a voice-over-internet protocol provider.

BJ's Restaurants stock slips

In secondary market action, BJ's Restaurants, Inc.'s stock edged down Monday after announcing a $61.5 million stock deal.

The stock fell 3 cents to end at $20.96 (Nasdaq: BJRI). On Friday, when the deal was announced, the stock gave up 63 cents to close at $20.99.

In the deal, BJ's plans to issue shares at $20.00 apiece to a group of new and existing institutional investors. The price per share is a 7.5% discount to the company's $21.62 closing stock price Thursday.

RBC Capital Markets is the lead agent.

Proceeds will be used for the company's expansion plans and for general corporate purposes.

Based in Huntington Beach, Calif., BJ's operates casual dining restaurants in California, Texas, Arizona, Colorado, Oregon and Nevada.

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