NewGen raises $70 million from loan; Hythiam closes $10 million note sale

By Sheri Kasprzak

New York, Jan. 18 - NewGen Technologies, Inc. led PIPE news with a $70 million loan with warrants. The offering was one of two loan deals with warrants to close Thursday.

BioFuel Investments, LLC (BFI), the investor in the offering, will receive warrants for 5 million shares, exercisable at $2.00 apiece. The strike price is a 161% premium to the company's $0.765 closing stock price on Wednesday.

The financing facility bears interest at 10%annually and matures in 10 years.

The company's stock edged up a penny on Thursday to close at $0.77 (OTCBB: NWGN).

Proceeds will be used for the purchase of the Appalachian Oil Co., for the repayment of debt and for other objectives to facilitate distribution of blended biofuels through the ReFuel America brand.

"The acquisition of APPCO allows ReFuel to capitalize on the existing APPCO supply-chain distribution to over 200 outlets for our premium blended biofuels," said Michael D'Onofrio, the company's chief operating officer, in a statement released Thursday morning.

"We are extremely pleased with BFI's decision to finance the acquisition," said Bruce Wunner, the company's chief executive officer, in the release. "BFI's investments show support for NewGen's business plan and the management's ability to execute. Upon successful closing of this transaction, we expect to roll out additional strategic initiatives. Our next targets will focus on upstream supply to complement our 'Fields to Wheels' business plan."

NewGen is not a newcomer to the PIPE market. The company raised $5 million in January 2006, selling convertible debentures to Cornell Capital Partners, LP.

In the 2006 placement, the three-year debentures are convertible at the lesser of $1.00 each or 80% of the lowest closing bid price for the five trading days before conversion.

NewGen, located in Charlotte, N.C., develops biofuel and hydrocarbon blends.

Hythiam's offering

In a similar deal, Hythiam Inc. came away with $10 million from the sale of senior secured notes with warrants.

The deal was conducted as part of Hythiam's acquisition of the membership interests from Woodcliff Healthcare Investment Partners, LLC.

Highbridge International, LLC bought the notes, which are due Jan. 15, 2010 and bear interest at Prime rate plus 250 basis points.

Highbridge received warrants for 249,750 shares, exercisable at $12.01 each for five years.

The membership interests in Woodcliff were purchased for $9 million in cash and 215,053 common shares with a value of $2 million.

Also, Hythiam announced its plans Thursday to merge with Comprehensive Care Corp.

The news of the acquisitions and the offering sent Hythiam's stock up 5 cents, or 0.5%, on Thursday to close at $10.06. The stock gained another 39 cents, or 3.88%, in after-hours activity (Nasdaq: HYTM).

Los Angeles-based Hythiam develops and commercializes treatments for drug and alcohol dependency for rehabilitation centers.

Miscor raises $12.5 million

Elsewhere, Miscor Group, Ltd. pocketed $12.5 million from a stock deal with Tontine Capital Partners, LP and Tontine Capital Overseas Master Fund, LP.

The investors bought 62.5 million shares at $0.20 each.

Proceeds will be used to pay off $10 million in senior secured debt. The remainder will be used for working capital.

The company's stock remained unmoved on Thursday at $0.20 (OTCBB: MCGL).

"This is a significant opportunity for us as we are well-positioned to continue our track record of strong sales growth," said John Martell, the company's CEO, in a news release. "Our decision to pursue a capital raise is directly related to our continued fast pace of both acquisition- and organic-based growth.

"This additional capital is critical to ensuring 2007 is another strong year for the company as we continue to bring ever-expanding products and services to our growing roster of blue-chip customers."

South Bend, Ind.-based Miscor provides mechanical and electrical industrial services for commercial, industrial and institutional clients.

HandHeld closes offering

In the tech sector Thursday, HandHeld Entertainment, Inc. concluded a $3,380,100 private placement of units comprised of shares and warrants.

The company issued 12,767 units of 100 shares and 100 warrants at $300 each.

Of the warrants issued, half are exercisable at $3.50 each for five years and half at $4.00 each for five years.

HandHeld may redeem the warrants after July 17, 2007 if its stock trades above $5.20 for more than five consecutive trading days.

The company's stock gained almost 5 cents Thursday to end at $3.6799 (Nasdaq: ZVUE).

"Since mid-November, we have acquired three web sites that feature user-generated and user-submitted videos and other forms of media and we plan to acquire more," said Jeff Oscodar, the company's CEO, in a statement. "These acquisitions have created a network of web properties that attracted more than 5 million unique visitors in December, more than a full year ahead of our plans. With these funds, we have an opportunity to move quickly to continue acquiring high-quality web sites with significant traffic thereby accelerating our business plan in 2007."

San Francisco-based HandHeld provides digital media products for web sites. It also develops the ZVUE line of portable media players.

Cortex stock slips

In secondary market action in the biotech sector, Cortex Pharmaceuticals, Inc.'s stock dropped a day after announcing a $5,623,998 direct stock placement.

The stock gave up 2 cents, or 1.87%, to end at $1.05 and lost another 2 cents in after-hours trading (Amex: COR). On Wednesday, when the deal was announced, the stock sank by 19.55%, or 26 cents, to end at $1.07.

The volume of Cortex shares traded Thursday remained elevated with 679,000 shares traded compared with the average 269,679 shares. On Wednesday, there were 1,755,100 shares of Cortex traded.

A buysider reached Wednesday said he is not a fan of the pharmaceutical company and said he feels the company had to sell their shares at a 16% discount to market "because they had to."

In the offering, the company will issue to a group of institutional investors shares at $1.12 each. The price per share is a 16% discount to the company's $1.33 closing stock price from Tuesday.

The deal also comes with warrants for 3,263,927 shares, exercisable at $1.66 each for five years.

Cortex expects the deal to settle on Jan. 22.

The shares will be sold under the company's shelf registration.

Proceeds will be used for the development of the company's Ampakiner technology to treat Alzheimer's disease, licensing activities, working capital and general corporate purposes.

Based in Irvine, Calif., Cortex develops drug therapies for neurological and psychiatric disorders.

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