Quest Resource undertakes $190.45 million private placement of stock; GigaBeam raises $18.9 million

By Sheri Kasprzak

New York, Nov. 8 - Quest Resource Corp. led PIPE news on Tuesday with its $190.45 million stock offering.

Quest plans to sell 14.65 million shares at $13.00 in an effort to buy back all of the class A equity interest in its subsidiary Quest Cherokee, LLC from ArcLight Energy Partners Fund I, LP's subsidiary Cherokee Energy Partners, LLP.

Quest has also granted an option for another 1,465,000 shares under the same terms within 30 days of closing.

The stock deal is scheduled to close by Nov. 14.

For the quarter ended June 30, Quest posted a net loss of $1,907,000, compared to a net income of $683,000 for the corresponding quarter in 2004.

Based in Oklahoma City, Quest is an oil and natural gas exploration company.

The offering was announced late Tuesday, and the company's stock lost $0.75, or 5.45%, to end at $13.00.

Elsewhere in the private placement market, GigaBeam Corp. settled an $18.9 million convertible preferred stock deal.

A group of institutional investors bought 18,900 shares of the company's series B convertible preferreds at $1,000 each.

The preferreds are convertible into common shares at $7.62 each. As of Aug. 5, GigaBeam had 4,883,840 outstanding common shares.

The preferreds initially pay annual dividends at 8%, increasing to 11% in the third year and to 14% in the fourth year.

The investors also received warrants for 1,302,200 common shares, exercisable at $7.9827 each for five years.

The proceeds will be used for working capital and general corporate purposes.

Based in Herndon, Va., GigaBeam provides point-to-point wireless communications systems.

The company's stock closed unchanged at $7.25 Tuesday.

Looking to its earnings, GigaBeam reported a net loss of $3,893,352 for the quarter ended June 30, more than twice the net loss of $1,703,752 it reported for the same quarter of 2004.

GigaBeam was not the only tech company in the PIPE market on Tuesday.

One market source said a recent boom in technology stocks has created a small surge of activity among tech companies seeking private placements.

"We started to see a rise in tech [stocks] about a week ago, maybe closer to two weeks ago," he said. "It's really starting to make an impact on PIPEs, so you should be seeing more and more of them in the coming days."

However, tech stocks were off of their gains earlier in the week.

"I don't think that will make much of a difference [to PIPEs]," the market source said. "I think interest is still up for techs. It'll be enough to drive some deals."

Stocks in general took a dip on Tuesday with the Dow Jones Industrial Average losing 46.51 to end at 10,539.72; the Nasdaq composite index giving up 6.17 to close at 2,172.07 and the Standard & Poor's 500 composite index slipping 4.22 to finish at 1,218.59.

Global ePoint's $6 million offering

In other tech offerings Tuesday, digital surveillance device maker Global ePoint, Inc. concluded a private placement of series D convertible preferred stock.

The 6% preferreds sold to institutions are convertible into common shares at $4.16 each. The investors received warrants for 721,157 shares, exercisable at $4.33 each.

H.C. Wainwright & Co., Inc. was the placement agent.

"The completion of this financing is important for Global ePoint because it will provide us with the ability to explore growth opportunities," said Toresa Lou, the company's chief executive officer, in a statement released Tuesday morning.

Proceeds will be used for working capital and general corporate purposes.

Based in City of Industry, Calif., Global ePoint makes digital surveillance devices for aviation, law enforcement and the commercial and industrial markets.

The company's stock slipped 3.3%, or $0.11, on Tuesday to settle at $3.22.

Intraop gets another $4.5 million

After sealing a $1.75 million private placement of convertible debentures last week, Intraop Medical Corp. raised another $4.5 million in the 7% debentures on Tuesday.

The three-year debentures are convertible into common shares at $0.40 each.

The investors also received warrants for 5,625,000 shares, exercisable at $0.40 for five years and short-term warrants for 5,625,000 shares, exercisable at $0.40 each until six months after the effective date of the registration statement.

On Nov. 1, the company issued $1.75 million of the debentures to Alpha Capital AG and Crestview Capital Master, LLC under the same terms.

"This completes our financing requirements," said Intraop chief executive officer Donald Goer in a statement. "We have now moved to our new 14,000-square-foot facility, re-capitalized our debt structure, secured a $3 million inventory financing line of credit and, with this last financing, obtained the working capital we believe is necessary to fully implement our business plan. There is a growing worldwide interest in hospitals in acquiring IORT treatment capability. We believe we are now in a position to meet that demand."

Based in Santa Clara, Calif., Intraop develops mobile electron beam systems used for radiotherapy treatments of cancer and coronary/vascular restenosis.

Its stock slipped 10.14%, or $0.07, to end the day at $0.62.

ECU plans C$5 million unit deal

Moving to Canada, Rouyn-Noranda, Quebec-based ECU Silver Mining Inc. has announced its plans to head to the private placement market with a C$5,005,000 unit offering.

The offering includes up to 14.3 million units at C$0.35 each.

The units include one share and one and one half-share warrant. The full warrants are exercisable at C$0.50 each for two years.

Union Securities Ltd. is the placement agent and has an over-allotment option for up to 15% of the units issued.

Proceeds will be used for exploration and development at the company's Velardena property in Mexico. The rest will be used for working capital.

The offering was announced Tuesday morning, and the company's stock settled up a penny to close at C$0.38.

ECU is a silver exploration company.

Homestore stock dips

A day after completing a $100 million convertible preferred stock offering, Homestore, Inc.'s stock dipped slightly before making a comeback in after-hours trading.

The stock was off a penny Tuesday but gained $0.10 in after-hours trading.

On Monday, when the settlement of the private placement was announced, the company's stock gained 18.26%, or $0.65, to end at $4.21. The company's stock gained another $0.04 in after-hours trading on Monday.

Homestore sold series B convertible preferreds to Elevation Partners, LP at $1,000 each. The preferreds are convertible at $4.20 each.

The Westlake Village, Calif.-based Homestore is a holding company for real estate web sites.

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