Canadians dominate private placements as U.S. stocks slip; BAK closes $17 million deal

By Sheri Kasprzak

Atlanta, Jan. 20 - Canadians once again made up the majority of private placement issuance Thursday as stocks in the United States took another dive.

Even so, Canadian volume was weaker than it had been earlier in the week, pushed down by sinking oil prices.

Oil dropped $0.64 Thursday to settle at $46.91 per barrel.

"There are some deals out there," said one Canadian source. "Oil is down today, but I think beyond that, issuers just have no real need to conduct private placements and so until they see a need for the money, the market will continue to see a decline [in volume]."

Some Canadian sources have suggested, however, that once merger-and-acquisition season starts up, more deals will be in the pipeline.

In the United States, volume was pushed down by falling stocks.

"Issuers are probably going to wait a while before getting any deals out there," said one market source. "Stocks are down and obviously issuers want to get the best pricing they can. They're naturally going to wait until their stocks perform better."

The Dow Jones Industrial Average lost 68.5 to end the day at 10,471.47, the Nasdaq composite closed down 27.71 at 2,045.88 and the S&P 500 ended 9.22 lower at 1,175.41.

Heading up U.S. offerings was a $17 million deal closed by BAK International Inc.

The offering included 8,600,433 shares sold at $1.98 each.

The deal was finished just before BAK completed a one-for-one stock exchange with Medina Coffee Inc.

As part of the exchange, BAK's stockholders, including participants in the private placement, received 39,826,075 shares of Medina.

The companies will now operate on a consolidated basis, with senior managers of BAK elected as executive officers of Medina, effective upon the resignation of Medina's sole executive.

Based in Shenzhen, China, BAK manufactures and distributes lithium ion rechargeable batteries.

On Thursday, Medina Coffee's stock closed up $1 at $6.

Storm Cat plans deal

Storm Cat Energy Corp. plans to raise up to C$12,480,000 in a private placement to help fund the purchase of an interest in a natural gas field.

The company plans to sell up to 3.2 million units at C$3.90 each.

The units are comprised of one share and one warrant. The warrants allow for an additional share at C$5.20 each for two years.

"There's nothing that indicates to me that this company is selling at a spectacularly large discount," said one market source. "I think this will probably go very well for both the company and the investors. The investors get a reasonably good price on the units and the company will make a bit more on the warrants."

The company will use the majority of the proceeds from the offering to buy all of Palo Petroleum Inc.'s rights, titles and interest in the NE Spotted Horse Field in Wyoming, including Palo's gas subsidiary Paso Gaso Pipeline LLC. The price of the field is US$8.55 million.

"This important acquisition is consistent with our growth plan of acquiring assets with significant development drilling opportunities in a renowned coal bed natural gas region of the United States," said Storm Cat's president Scott Zimmerman in a statement.

"Here we can apply our technical expertise in multi-seam completions, which significantly reduces finding and development costs. The NE Spotted Horse Field is also located in close proximity to our recently acquired N. Jamison/Twenty-Mile field, which will provide operational synergy."

Proceeds raised in the private placement that are not used for the acquisition will be used for new exploration drilling on the field and for future property acquisitions. The remainder will be used for general working capital.

Storm Cat is a Calgary, Alta.-based natural-gas development company.

The company's stock closed up C$0.45 at C$4.95 on Thursday.

VitroTech closes $3 million offering

VitroTech Corp. raised $3 million in a private placement of secured convertible notes.

The 11% notes mature Dec. 31, 2006, and may be extended to Dec. 31, 2007.

The notes are convertible into common shares. The conversion price was not available at press time Thursday.

An institutional investor bought the notes and provided an initial advance of $1.5 million. The remainder will be bought in three $500,000 increments.

Warrants for a total of 4,833,333 shares will be issued to the investor once all of the notes have been purchased.

"We are pleased to have completed this funding and by the investor's belief in, and commitment to, our vision," said VitroTech's chief executive officer Glenn Easterbrook in a statement. "We expect to be able to attain the sales milestones to draw the balance of the funding committed. We believe that this funding, along with the streamlining of operations and refocused sales strategy, will position VitroTech to achieve growth in sales and profitability."

The Shemano Group was the placement agent in the offering.

Based in Santa Ana, Calif., VitroTech is a materials technology and research company.

Luna Gold raises US$2.3 million

Canadian gold exploration company Luna Gold Corp. has wrapped up a private placement offering for US$2,270,350.

The company sold 7,567,835 units at US$0.30 each. The units include one share and one warrant.

The warrants provide for an additional share at $0.50 each through Jan. 18, 2007.

"Gold is doing phenomenally well these days," said one Canadian market source. "This deal is very good for the company. It just makes sense, really. The gold market is strong and gold companies like this have been able to get incredibly good pricing."

Luna Gold, based in Vancouver, B.C., is a gold exploration company.

On Thursday, the company's stock closed down C$0.03 at C$0.30.

IFuture plans deal for C$1.5 million

IFuture.com Inc. announced its plans Thursday to raise C$1.5 million in a private placement.

The company plans to sell 2.5 million units at C$0.60 each. The units consist of one share and one half-share warrant.

The whole warrants allow for an additional share at C$0.75 each for one year.

Standard Securities Capital Corp. is the placement agent in the deal.

Based in Toronto, IFuture provides e-commerce products and entertainment-based content for internet companies. The company will use the proceeds from the offering to continue its restructuring in the form of a business combination with Red Dragon Gold Corp., by means of a merger, share exchange, amalgamation or arrangement plan. The new company formed by the combination will be Red Dragon Resources Corp.

IFuture's stock closed down C$0.20 at C$0.50 on Thursday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.