Private placement volume stalls on lower oil, stocks; Penwest raises $35 million

By Sheri Kasprzak

Atlanta, Dec. 10 - Private placement volume rounded out the week on a low note as stock prices dropped and oil prices sank.

"Well, beyond the fact that it's Friday and Friday's always tend to be a little slower than most days, stocks are down and that seems to be pushing volume down a little bit," said one sell-sider.

The Dow Jones Industrial Average lost 9.6 points Friday to end at 10,543.22, Nasdaq was down 0.94 to close at 2,128.07 and the S&P 500 closed the day down 1.24 at 1,188.

Oil prices took a dive as well, dropping $1.82 Friday to end at $40.71 per barrel.

"Oil prices are, obviously, a big factor for Canadian issuers because, as you know, several energy companies here conduct private placements on a regular basis," said one Canadian market source. "If oil prices are down, energy stocks are most likely going to be down and that affects volume."

Heading up action in the United States Friday, Penwest Pharmaceuticals Co. said it secured agreements for a $35 million private placement.

The company will issue 3.125 million shares at $11.20 each.

"It probably could have priced a bit better," said one market source who had seen the deal. "The company's stock has been trading much higher than $11.20, even though it was down significantly this afternoon."

On Friday, the company's stock closed down $0.36 at $12.11.

Throughout December, Penwest's stock has traded between $12.85 and $12.11.

Penwest, a Danbury, Conn.-based biopharmaceutical company, plans to use the proceeds from the offering for the research, development, marketing and commercialization of its products and technologies and for general corporate purposes.

V.I. Technologies wraps deal

V.I. Technologies Inc. finished a private placement for proceeds of $20 million, the company said Friday.

Investors bought 100 million shares at $0.20 per share in an offering that also included detachable warrants for up to 45 million shares at $0.24 each for five years.

SG Cowen & Co. LLC was the placement agent in the deal.

The deal is scheduled to close along with the company's merger with Panacos Pharmaceuticals Inc.

"This financing represents an important milestone in our goal of building a preeminent anti-infectives company," said V.I. Technologies' chief executive officer Samuel Ackerman in a statement. "The combined company will have the financial resources to advance our promising clinical development programs. We attracted an outstanding investor group, including further investment by existing shareholders. The new investors are committed to the long-term success of the company, as evidenced by their investment commitment and their representation, upon the closing, on our board of directors."

Based in Watertown, Mass., V.I. Technologies is a biopharmaceutical company focused on developing anti-infective products.

On Friday, V.I. Technologies' stock closed at $0.65 Dec. 9, its last trade.

Tarrant closes $10 million offering

Tarrant Apparel Group raised $10 million through the private placement of convertible debentures and warrants.

The company sold three-year secured convertible debentures to several investors on Dec. 6.

The debentures are convertible into common shares at $2 each and accrue interest at 6% per year.

The offering also included warrants for 1.25 million shares, which allow for an additional share at $2.50 for five years.

Tarrant, based in Los Angeles, is a specialty clothing retailer. The company's stock closed unchanged at $1.99 Friday.

Introgen raises $7.8 million

Introgen Therapeutics Inc. closed a direct placement of shares Friday for $7.8 million in a direct placement.

The shares were sold to European institutional investors.

Introgen sold 975,000 shares at $8 each. The shares in the deal were issued under the company's shelf registration.

"On Nov. 15, 2004, the company reported a cash balance of $20.8 million for the third quarter 2004," said Introgen's vice president of finance Tom Finnegan, in a statement. "The injection of an additional $24 million increases and strengthens the strategic opportunities available to Introgen on a global basis."

The company also raised $16.4 million in a direct placement which closed Dec. 8.

Mulier Capital was the placement agent in the transaction.

Introgen is an Austin-based developer of biopharmaceutical products to treat cancer and other diseases. The company plans to use the proceeds from the financing for working capital and general corporate purposes, including developing its anti-cancer product candidates.

On Friday, Introgen's stock closed down $0.05 at $7.65.

International Card gets $3.2 million

International Card Establishment Inc. received $3.2 million in a private placement of preferred stock.

Four institutional investors bought 32,000 shares of series A preferred stock at $100 per share on Dec. 6.

The preferreds are convertible into common shares at $0.47 each.

The deal also included warrants for 8,010,012 warrants to buy an additional share at $0.47 each for half of the warrants and $0.75 per share for the other half.

J.P. Turner & Co. LLC was the placement agent in the offering.

International Card Establishment is a credit card servicing and leasing company based in Oxnard, Calif.

The company's stock closed up $0.06 at $0.51 Friday.

Canadian offerings

Leading Canadian private placements Friday was a C$6.6 million offering closed by Vensearch Capital Corp. for Genetic Diagnostics Inc. The sale is part of the acquisition of Genetic Diagnostics by private company Vensearch.

The company issued 15 million units at C$0.44 each.

The units are comprised of one Genetic Diagnostics class C shares, series 1 and one half-share series 1 warrant.

The whole warrants allow for an additional share at C$0.55 each for 20 months.

McFarlane Gordon Inc. is the lead placement agent in the offering and Research Capital Corp. is the co-agent in the deal.

Genetic Diagnostics, based in Toronto, designs and manufactures genetic testing technology for clinical laboratories. The company plans to use the proceeds from the financing to fund an independent validation process, pay license fees for its technology, repay outstanding payables and deploy a budget mutually agreed with Vensearch.

Vensearch's stock closed at C$0.49 Sept. 20, its last trade.

Hillsborough plans offering

Hillsborough Resources Ltd. announced its plans to raise up to C$6.6 million in a private placement.

The company plans to sell 5 million common shares at C$0.90 each and 2 million flow-through common shares at C$1.05 each.

Sprott Securities Inc. is the placement agent in the offering.

Based in Toronto, Hillsborough is a coal exploration company. It plans to use the proceeds from the flow-through shares for Canadian exploration expenses and the remainder of the funds will be used for general corporate purposes.

The company's stock closed up C$0.03 at C$1 Friday.

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