Feldman Mall to settle $50 million deal; Viragen pockets $3 million from convertible preferreds

By Sheri Kasprzak

New York, April 16 - Feldman Mall Properties, Inc. led another light day of PIPE action with word that it has just inked a $50 million convertible preferred stock deal with Inland American Real Estate Trust, Inc.

The offering includes up to 2 million shares of 6.85% in series A convertible preferred stock, to be sold over the next year at $25.00 apiece. The preferreds are convertible at $14.10 each, pending shareholder approval.

If the shareholders do not approve the conversion of the preferreds, the dividend increases to 7.85% on June 1, 2008 and by 100 basis points for each subsequent year, capped at 9.85% on June 1, 2010.

The initial closing of the deal is set for April 30 and will include at least 600,000 shares of the preferreds.

Feldman said it plans to use the proceeds to redevelop the company's mall assets and to repay borrowings under a current credit line. The rest will be used for general corporate purposes.

Friedman, Billings, Ramsey & Co., Inc. was the placement agent for the offering.

The stock ended the day down 13 cents, or 1.04%, to close at $12.34 (NYSE: FMP). Volume was lower than usual with 27,000 shares traded compared with the average 42,430 shares.

With headquarters in Great Neck, N.Y., Feldman Mall Properties is a real estate investment trust that acquires, owns and operates regional shopping malls.

Meanwhile, in the broader market, sellside sources said the PIPE market is set to take off again this week as stocks rose.

"I don't think it's been that bad, to be honest with you," noted one sellsider. "It's been a lot slower. The problem is we're getting toward the middle of the year. You see your big jumps in volume near the end of the year and then at the beginning as companies look at what their needs are for the year. Things are going fine."

Another sellsider also seemed optimistic about volume.

"I'd probably agree that things have been lagging there for a while, but the stock market has taken a beating," he said. "I will say that I think things are looking up. Stocks were back strong today; so, that may encourage some activity."

The Dow Jones Industrial Average gained 108.33 to close at 12,720.46 and the Nasdaq composite index climbed 26.39 to settle at 2,518.33. The Standard & Poor's 500 composite index was up 15.62 at 1,468.27.

Gold prices rise

Elsewhere in PIPE news Monday, gold prices rose, sparking a few sizable offerings.

Wits Basin Precious Metals Inc. announced the closing a $25 million offering of secured convertible promissory notes with China Gold, LLC.

The 8.25% five-year notes are convertible at $1.00 each, a 15% premium to the company's closing stock price on April 10, the date the agreement was sealed.

At closing, China Gold purchased $3 million in principal of the notes and will buy another $9 million at its discretion. The investor has the right to buy up to $22 million in additional principal within the next year.

The company's stock moved down a penny, or 1.11%, to settle at $0.89 (OTCBB: WITM). Volume was off with just 240,269 shares traded compared to the average 1,421,720 shares.

Wits Basin, based in Minneapolis, is a gold exploration company.

Goldrea plans C$12 million deal

In other gold deals, this one north of the border, Goldrea Resources Ltd. negotiated the terms of a C$12 million placement of units.

The planned non-brokered deal includes up to 20 million units of one share and one warrant. The warrants are exercisable at $0.75 each for two years.

The C$0.60 unit price is a 10.4% discount to the company's C$0.67 closing stock price on Friday.

Proceeds will be used for a Chinese joint venture and for general corporate purposes.

On Monday, the company's stock remained unmoved at C$0.67 (TSX Venture: GOR).

Located in Vancouver, B.C., Goldrea is a gold exploration company.

The offering comes just as gold prices advanced by $4.60 to end the session at $694.50 per ounce.

Viragen raises $3 million

Biotech companies remained prevalent in private placement news to kick off the week with Viragen, Inc. settling a $3 million offering of units comprised of series K cumulative convertible preferred stock and warrants.

News of the deal sent the company's stock up early, gaining 9.3%, or eight-tenths of a cent, by 8:31 a.m. ET. The stock went on to lose 6.86%, or six-tenths of a cent, to end at $0.0801 (Amex: VRA).

In the placement, the company sold 30,000 units to London-based RAB Capital plc. The units included one share of the preferred stock and warrants for 500 shares.

The 18% preferreds are convertible at $0.10 each, a 16.3% premium to the company's $0.086 closing stock price from Friday.

The warrants are exercisable at $0.10 each for five years.

Proceeds will be used for manufacturing and licensing its Multiferon product, as well as for candidate research and development programs and for working capital.

Based in Plantation, Fla., Viragen develops treatments for cancer and viral diseases.

Avicena plans offering

In other biotech news, Avicena Group, Inc. priced an $8 million private placement of series B convertible preferred stock.

The offering is expected to include up to 1.6 million shares of the 10% preferreds.

The preferreds are convertible into common shares at $5.00 each.

Investors will also receive warrants for 800,000 shares, exercisable at $7.00 each for five years.

Blackwater Capital Group, Inc. is the placement agent.

The offering is expected to close May 21.

The placement is in addition to the $2 million in series B convertible preferreds Avicena wrapped in late March.

Located in Palo Alto, Calif., Avicena Group is a biotechnology company focused on developing treatments for neurological disorders.

Novelos stock dips

After announcing the planned closing of a $15 million offering of convertible preferred stock late last week, Novelos Therapeutics, Inc.'s stock edged down by a penny on Monday.

The stock fell 0.76% to close at $1.30 (OTCBB: NVLT). On Friday, when the offering was announced, the stock gained a penny to close at $1.31.

In the placement, a group of investors that includes Xmark Opportunity Funds and OrbiMed Advisors plans to buy 9% series A convertible preferreds that are convertible at $1.00 each, a 23% discount from the company's $1.30 closing stock price on April 12.

The deal is expected to close within the next week.

Rodman & Renshaw, LLC is the lead agent.

Newton, Mass.-based Novelos develops treatments for cancer.

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