Volume holds steady despite holiday, falling oil; Tag-It gets $12.5 million in notes

By Sheri Kasprzak

Atlanta, Nov. 11 - Even as Americans celebrated the Veterans Day holiday and despite oil's continued downward spiral, private placement volume in the United States remained moderate Thursday.

Issuers could be trying to get deals done ahead of the holiday season, according to some sell-side sources.

"I think the volume will remain high till about the first week of December, then the holidays will close the window," said one source. "So now is the time to get this done."

Canadian volume was sparse, possibly pulled down by sagging oil prices, according to Canadian sell-side sources.

"We have only seen a few smaller deals today," said one Canadian sell-sider. "Most of the deals I've seen are under C$1 million. I think it's probably oil. Some companies might be waiting for oil to recover."

On Thursday, oil prices dropped $1.44 a barrel to close at $47.42.

Only three Canadian companies made announcements with regard to private placements Thursday, with the largest deal for C$6 million.

Leading private placement action in the United States, Tag-It Pacific Inc. announced it raised $12.5 million in 6% convertible notes.

The notes are convertible at $3.65 per share and include 171,233 warrants, exercisable for five years at $3.65.

Tag-It's stock closed down $0.06 Thursday at $3.35.

"It's priced in line," said one trader familiar with the deal. "I think it looks like a decent deal for the company."

Sanders Morris Harris Inc. acted as placement agent in the deal.

"We are gratified with the confidence these institutional investors have showing the our growth strategy and pleased with the favorable terms of this financing agreement, which includes a conversion price at a premium to the market and a future option enabling the company to redeem the notes for cash," said Colin Dyne, Tag-It's chief executive officer, in a statement.

"This transaction will provide the necessary working capital to execute our aggressive growth strategy for our three operating divisions."

Based in Los Angeles, Tag-It Pacific is a trim distribution company for retail clothing manufacturers and mass merchandisers. The company plans to use the funding from the deal to repay its existing UPS credit facility, for working capital and to roll out its Talon zipper division.

BioSphere closes $8 million deal

BioSphere Medical Inc. closed its previously announced $8 million private placement a few days later than expected.

The company had originally planned to wrap up its offering Nov. 8, but said Thursday it sold the 8,000 shares of series A preferred stock to Sepracor Inc. and affiliates of Cerberus Capital Management LP for $1,000 per share. The shares are convertible into two million common shares at $4, or a 32% premium over the company's closing price Nov. 10.

The investors also received warrants for 400,000 shares at $4 per share exercisable for five years.

BioSphere is a Rockland, Mass.-based medical device company focused on bioengineered microspheres to treat uterine fibroids, hypervascularized tumors and vascular malformations in the blood supply. The company plans to use the proceeds from the offering for general corporate purposes, including working capital and capital expenditures.

On Thursday, the company's stock closed up $0.11 at $2.75.

Spescom gets $2.2 million

Spescom Software Inc. raised $2.2 million in a private placement.

Mercator Advisory Group LLC and Monarch Pointe Fund Ltd. bought 2,200 series G convertible preferred shares at $1,000 each. The investors also got three-year warrants for 2.75 million shares at $0.44.

The preferred shares are convertible into common stock at a range between $0.40 if trailing four quarters revenues are more than $10 million and $0.30 if the trailing four quarters revenues are equal to or less than $9 million. The conversion price may not exceed $0.40.

"We are very excited about our involvement with Mercator and its affiliates as it clearly validates our strategic initiatives," said Spescom chief executive officer Carl Mostert in a statement. "We believe that the additional funding will enable Spescom to significantly accelerate its marketing and sales efforts."

Cappello Capital Corp. acted as financial advisor in the deal.

Spescom, based in San Diego, is an information-management software company. It plans to use the proceeds from the financing to accelerate its marketing and sales efforts.

Spescom's stock closed up $0.02 at $0.44 Thursday.

Joystar announces deal

In the smallest U.S. private placement announced Thursday, Joystar Inc. said it plans to raise up to $1 million in a private placement.

The company will offer up 500,000 units of two shares and one warrant at $2 per unit.

The warrants allow for the purchase of one share at $1.25. Additional details about the warrants could not be obtained by press time Thursday.

Based in Irvine, Calif., Joystar is an online travel services company.

Joystar's stock closed Thursday up $0.03 at $1.08.

St. Andrew enters market

Heading up deals in Canada Thursday was an offering from St. Andrew Goldfields Ltd. for C$6 million.

The Oakville, Ont.-based gold-mining exploration company plans to sell 25,532,000 flow-through shares at C$0.235 for C$6,000,020.

The offering is expected to close Nov. 30.

ZED Financial Partners will act as placement agent in the deal.

St. Andrew is an Oakville, Ont.-based gold-mining exploration and development company. It plans to use the proceeds for exploration and development expenses.

The company's stock closed down C$0.015 Thursday at C$0.175.

Strateco plans C$2.5 million deal

Strateco Resources Inc. announced its C$2.5 million private placement offering Thursday.

The deal includes 12.5 million flow-through shares at C$0.16 and 4,166,667 units of one non flow-through share and one half-share warrant at C$0.12 per unit.

The two-year warrants are good for one additional non flow-through common share at C$0.20.

The placement agent in the deal is Research Capital Corp.

Strateco is a Montreal-based mining company. It plans to use the proceeds from the flow-through shares for exploration of its Discovery and Cameron projects in Quebec. The units will be used for general working capital.

Strateco's stock closed at C$0.14 Nov. 10, its last trade.

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