Qiao Xing secures $40 million from convertible bonds; Sonus stock climbs on $30.5 million direct offering

By Sheri Kasprzak

New York, April 28 - China's Qiao Xing Universal Telephone, Inc. led PIPE activity to round out the week, securing $40 million in convertible bonds from two strategic investors.

The placement sent Qiao Xing's stock up 10.68%, or 89 cents, on the day to settle at $9.22, gaining another penny in after-hours trading (Nasdaq: XING). On Thursday, the stock gave up 33 cents to close at $8.33.

Trading volume of the company's stock was elevated on Friday with 984,463 shares traded compared with the average of 293,505 shares.

The three-year bonds are convertible at 115% of the volume weighted average price of the company's stock for the five trading days after the term sheet is signed.

"One of the two strategic investors has recently completed two rounds of investment in the company by purchasing 3 million shares of common stock of XING," said Wu Rui Lin, the company's chairman, in a news release. "Now it has signed binding agreements to buy 90% of the $40 million's worth of bonds with the potential of their's being converted into common stock of XING or common stock of QXMC [subsidiary Huizhou Qiao Xing Communication Industry, Ltd.] in the event of an initial public offering.

"We believe that this sequence of events demonstrates this strategic investor's confidence in XING and XING's ability to attract institutional investors.

"With the funds raised from the sale of 3 million shares of common stock and to be raised from this proposed $40 million convertible bond sale, Qiao Xing Universal Telephone's operating subsidiaries CECT and Huizhou Qiao Xing Communication Industry, Ltd. are poised to achieve even greater success in the fields of high-end mobile phone handsets, indoor telephone sets with value added features and [voice-over-internet protocol] terminal products."

The 3 million shares were purchased in two placements conducted in January and February. In the first, closed Jan. 17, the investor bought 2 million shares in a registered direct placement and in the second, the investor bought 1 million shares, also in a direct offering.

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

Based in Guangdong, China, Qiao Xing develops and distributes telecommunications products.

Sonus's $30.5 million deal

Moving to the biotech sector, Sonus Pharmaceuticals, Inc. is gearing up to wrap a $30.5 million direct placement of shares with a group of new and old institutional investors led by Federated Kaufmann Funds.

The investors agreed to buy 6.1 million shares at $5.00 each, a 4% discount to the company's $5.21 closing stock price on April 27.

The deal is slated to close May 2.

The shares are being sold under the company's shelf registration.

Needham & Co., LLC was the lead agent.

The offering was announced Friday morning, and by the end of the day, the drug company's stock had advanced by 7.87%, or 41 cents, to close at $5.62 (Nasdaq: SNUS).

The volume of the shares of Sonus traded Friday was markedly higher with 993,296 shares traded. The average volume is 185,806 shares traded.

One sellside trader said the pricing seemed a bit low on the offering.

"I'd have thought they might have gotten a slightly better price, but since there appear to be no warrants, maybe it's not a bad deal," said the sellsider. "At least it's out of the way and we probably won't see another financing until well into next year. Sonus's Aug. 5 puts saw selling, with 4,000 contracts trading at average price of $0.325 - close to the bid at the time. This is notably heavy trading in Sonus options and could suggest expectations for more limited volatility and limited downside in the stock but it looks like the $5.00 floor is in."

"They'll now have $40 million in cash at the end of 2006," the sellsider continued. "That may be enough to get them all the way to approval in early to mid-2008, at which time the milestone payments from Schering start to kick in, along with royalty revenues from sales."

Sonus chief executive Michael Martino, he continued, "has said that approval based on non-inferiority triggers an initial milestone of $81 million, and approval based on superiority triggers a payment of $125 million, so either way, it's unlikely further financings would be necessary. Whether this will be enough money to get them to that point will probably depend on how many supplemental trials they do."

Proceeds from the offering will be used for the phase 3 clinical development of the company's Tocosolr Paclitaxel product and to expand the company's oncology pipeline.

"We are pleased with the quality of the investors in this financing and their support of our development initiatives," said Martino in a statement released Friday morning. "This raise significantly strengthens our balance sheet and provides greater flexibility to simultaneously fund our share of the remaining clinical development of Tocosolr Paclitaxel and to expand our efforts to develop additional products to broaden and deepen our oncology pipeline."

Located in Bothell, Wash., Sonus develops oncology drugs.

Houston American raises $16.6 million

As oil prices rebounded Friday, Houston American Energy Corp. shut a $16.6 million stock sale with a group of accredited investors.

The oil exploration company issued 5,533,333 shares at $3.00 each.

Sanders Morris Harris Inc. was the placement agent.

The company's stock slipped 4 cents on Friday to settle a $4.90 (OTCBB: HUSA).

Houston American is based in Houston.

Elsewhere in the energy sector, United Fuel & Energy Corp. closed a $6.05 million offering of series A convertible preferreds.

Sanders Morris Harris was also the agent on this offering.

The investors bought 6,050 shares of 8% preferred stock convertible at $1.50 each.

On April 4, United Fuel sold 6,750 shares of the series A preferreds in a separate offering. The company also issued 1,333,333 common shares at $1.50 each in the placement.

"We are pleased to complete this financing, which, together with our previously announced sales of securities, has provided us with total net proceeds of $13.7 million with which to fund our growth and strengthen our balance sheet," said CEO Chuck McArthur, in a statement. "We have identified numerous opportunities to expand our business and see the market condition as ripe for executing our growth model. We appreciate the support of Sanders Morris Harris and the confidence of our new investors during these exciting times."

On Friday, the company's stock gained 5 cents, or 2.86%, to end at $1.80 (OTCBB: UFEN).

Based in Midland, Texas, United Fuel distributes gasoline, diesel, propane and lubricant products.

Meanwhile, oil prices climbed after two straight days of losses, gaining 91 cents to close at $71.88 per barrel.

Camtek wraps $15 million offering

In the tech sector, Camtek Ltd. closed a $15 million stock deal selling 2,525,252 shares at $5.94 each to a group of Israeli institutions.

The investors received warrants for 1,262,626 shares, exercisable at $6.83 each for four years.

"We are pleased with the successful and quick execution of the private placement," said Ronit Dulberg, the company's chief financial officer, in a news release. "The company's strong performance in recent quarters and the potential future growth enabled us to raise the funds from a position of strength."

The stock dipped 2.17%, or 13 cents, to close at $5.86 Friday (Nasdaq: CAMT).

Located in Migdal Ha'Emek, Israel, Camtek develops optical inspection systems used by manufacturers of printed circuit boards.

PGM prices C$30 million deal

In Canada, PGM Ventures Corp. negotiated a C$30 million unit offering.

The deal includes up to 10 million units of one share three subscription receipts with each receipt exchangeable for one common share once PGM's Spanish subsidiary receives permits for exploitation and expansion on the Aguas Tenidas mine in southern Spain.

The offering is being placed through a syndicate of agents led by MGI Securities Inc., Orion Securities Inc. and Canaccord Capital Corp.

The offering includes up to 10 million units of one share and three subscription receipts. Each receipt is exchangeable for one common share once.

On Friday, the stock gained 5 cents, or 6.25%, to settle at C$0.85 (TSX Venture: PPG).

The offering has left shareholder Northcote Holdings Ltd. threatening to change the composition of PGM's board of directors.

In a letter to PGM Friday, Northcote said it finds the offering dilutive and refuses to support the placement.

Northcote holds 11% of PGM's stock.

Toronto-based PGM is a mineral exploration company.

Cyclacel stock dips

A day after announcing the pending conclusion of a $45,331,500 private placement of units, Cyclacel Pharmaceuticals, Inc.'s stock slipped 9 cents, or 1.17%, to close at $7.59 (Nasdaq: CYCC).

On Thursday, when the deal was announced, the stock climbed 9.71%, or 68 cents, to settle at $7.68.

In the placement, Cyclacel agreed to sell units of one share and one warrant for 0.4 of a share at $7.05 each to a group of institutional investors.

Cowen & Co., LLC was the bookrunner.

The proceeds will be used to develop the company's three development-stage anticancer products - seliciclib, sapacitabine and CYC116.

Cyclacel, based in Short Hills, N.J., is a biopharmaceutical company focused on treatments for cancer.

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