Heavy Canadian private placement action; Aames sells $39.5 million, Zix brings $20 million

By Sheri Kasprzak

Atlanta, Nov. 2 - Canadian private placements ruled the market Tuesday with a rush of smaller deals but the U.S. market also saw a few larger deals wrapped up.

Heading up action in the U.S. market, Aames Investment Corp. agreed to sell $39.5 million to one institutional investor.

The company sold five million shares to Friedman, Billings, Ramsey Group Inc. at $8.50 per share.

Aames, a Los Angeles-based mortgage real estate investment trust, expects the deal to close along with its previously announced $297.5 million initial public offering, for which Friedman, Billings, Ramsey is bookrunner.

The company's stock soared after trading in the IPO began to close up $0.78 at $9.28.

Aecon greenshoe exercised

Aecon Group Inc. said Tuesday underwriters GMP Securities Ltd. and Paradigm Capital Inc. exercised the greenshoe on its previously announced private placement for C$30 million.

The underwriters exercised a C$5 million over allotment option on the C$25 million unsecured subordinated convertible debentures. The debentures, which mature Nov. 2, 2009, bear quarterly interest at 8.25% and are convertible into common shares at C$7.50.

Toronto-based Aecon is a construction and infrastructure development company. The company plans to use the proceeds from the funding to repay debt due at the end of the year, to finance several large projects, to strengthen its financial position and to use as working capital.

Aecon's stock closed unchanged at $6.15 Tuesday.

Zix closes $20 million deal

Zix Corp. said Tuesday it received $20 million in the private placement of convertible notes.

The notes bear interest at Libor plus 300 basis points and are convertible into common shares at $6. Zix has the option to force the conversion of the notes if its common stock trades about $11 for a specified period. The notes are convertible initially into 33.3 million shares.

"This transaction enhances our financial position, helps us maintain leadership in both the communications protection and care delivery markets, and enhances our cash position as we progress on a timeline toward cash flow breakeven," said John A. Ryan, chairman and chief executive officer for Zix, in a statement.

Zix is a Dallas-based secure electronic communications company. The fund will be used to improve the company's cash flow and help it move toward cash-flow breakeven, according to a company statement.

On Tuesday, the company's stock plummeted $0.51 to close at $4.88.

Genaera gets $13 million

Although not strictly a PIPE deal, Genaera Corp. announced a $13 million direct placement with institutional investors at a discount.

The company sold 3,775,748 shares at $3.45 per share. The shares were offered through a prospectus supplement to Genaera's shelf registration statement.

The price is a 13% discount to the stock's level on the Nasdaq SmallCap Market on Nov. 1. The deal is expected to close Nov. 5.

According to one trader familiar with the issue, the deal priced "in line" with the market.

W.R. Hambrecht & Co. and Fortis Securities are the placement agents in the offering.

Genaera is a biopharmaceutical company based in Plymouth Meeting, Pa.

Canadian deals

Heading up Canadian private placement action was a C$11 million offering from Technicoil Corp. The deal includes 5,650,000 shares at $1.95.

Technicoil expects the deal to close Nov. 22.

Based in Calgary, Alta., Technicoil is an oil and gas service company. It plans to use the proceeds from the financing to fund the construction of six coil-fracturing units. Its stock closed unchanged at C$2.15 Tuesday.

StrataGold plans C$10 million deal

StrataGold Corp. said Tuesday it will raise C$10 million in a private placement.

The financing consists of C$7.5 million in special warrants and C$2.5 million in flow-through common shares.

The warrants are convertible at no cost into one unit of one common share and one half-share purchase warrant for two years.

Pricing of the deal, according to a statement from the company, will be determined based on the context of the market and the offering is scheduled to close Dec. 1.

Placement agents Paradigm Capital Inc. and Salman Partners Inc. have an over-allotment option of C$3 million.

The deal will be offered to investors in Ontario, Nova Scotia, Quebec, Manitoba, Alberta, British Columbia and the United States.

StrataGold is a Vancouver, B.C.-based gold exploration company. It plans to use the proceeds from the special warrants for working capital for payments on its Dublin Gulch gold property in the Yukon. The flow-through shares will be used for its 2005 exploration program in the Mayo Gold District of the Yukon.

StrataGold's stock closed up C$0.01 Tuesday at C$0.55.

China Diamond's C$5 million deal

China Diamond Corp. said Tuesday it plans to raise C$5 million in convertible debentures and an additional C$1.03 million in the second tranche of a private placement.

The convertible debentures have a five-year term and are convertible into common shares at $0.35.

The debentures carry an interest rate of 5% per year and China Diamond has an option to pay interest in common shares rather than cash for the first one-year term of the debentures at $0.12 per share of interest owing. During the fourth and fifth years of the term, the company may force the conversion of the debentures into shares at $0.35 if the shares trade at a 50% premium for more than 30 days.

IBK Capital Corp. is placement agent.

IBK also acted as placement agent in the company's C$1,028,010 private placement which closed Tuesday.

The deal is the second tranche of a C$1,528,050 offering. It consists of 9,345,544 units of one share and one purchase warrant at C$0.11 per unit. The warrants are exercisable for one year and allow for the purchase of an additional share at C$0.15 per share.

The first tranche closed Oct. 7 and was comprised of 4,545,818 units for a total of $500,040.

"We are extremely pleased to be closing the IBK private placement and look forward to working with IBK on the closing of the convertible debenture financing," said Philip Cassis, China's president, in a statement. "The proceeds of the convertible debenture financing, when closed, will allow us to accelerate some of the planned exploration and development of the companies property in China."

China Diamond, based in London, Ont., is a diamond and gold mining and exploration company. The debentures will be used to finance exploration and development on the company's diamond and gold prospects in China.

Lemontonic plans C$5 million offering

Toronto-based networking software company Lemontonic Inc. will offer up a C$5 million private placement, the company said Tuesday.

The deal consists of 33.3 million class A shares offered at a price to be determined, but based upon an undiscounted price of C$0.15 per share.

Canaccord Capital Ltd. will serve as placement agent in the deal.

Lemontonic also engaged Canaccord to act as adviser and broker to list the shares on the Alternative Investment Market of the London Stock Exchange after the private placement closes.

"We have been approached by a number of parties based in the United Kingdom and other European markets who are interested in licensing and deploying our technology as we look to expand outside of North America," said chief executive officer Mark Pavan, in a statement.

Lemontonic is a Toronto-based networking software company. The company plans to use the proceeds from its private placement for marketing, product research and development, payment of outstanding accounts and general working capital.

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