Two Canadian private placements start week; NGAS sells $6.1 million convertibles

By Sheri Kasprzak

Atlanta, Oct. 4 - Two Canadian companies led private placement action Monday, preparing to enter the market while an American natural gas company NGAS Resources Inc. wrapped up a $6.1 million convertible note issue.

NGAS Resources Inc. said Monday has wrapped up a $6.1 million institutional private placement of a convertible note.

The 7% note, which is due Oct. 4, 2009, is convertible into the company's common stock at an initial conversion price of $6 per share.

The note was sold to BayStar Capital Fund II, a private fund managed by BayStar Capital. The investor also received a five-year warrant to purchase up to 440,000 common shares at an exercise price of $6 per share.

Placement agent for the deal was the Shemano Group Inc., which received a 7% fee and five-year warrants to purchase up to 43,700 shares of the company's common stock at $6 per share.

"The funds from this private placement will support our long-term growth strategy," said NGAS's president and chief executive officer William S. Daugherty, in a news release.

Daugherty said in two separate transactions the company acquired $7.8 million in natural gas reserves in Leslie and Bell counties in Kentucky. The company also plans to acquire $27 million in natural gas reserves from Stone Mountain Energy.

"We expect to use about half of our proceeds from today's note financing to complete the Stone Mountain (Energy) acquisition within the next two weeks and the balance for ongoing drilling initiatives and construction of gathering systems in our core Appalachian Basin operating areas," Daugherty said.

The Lexington, Ky.-based NGAS Resources focuses on natural gas development drilling and reserve growth.

Paramount, Majescor from Canada

The larger of the two Canadian deals will come from Paramount Resources, which plans to raise as much as C$59 million in a private placement.

Paramount plans to sell up to two million shares of common stock on a flow-through basis, the company announced Monday.

About half of the flow-through shares are to be sold to directors, managers and employees of Paramount under a separate private placement, the company said.

The deal is one part of an initiative to raise C$105 million to repay debt and for general corporate purposes.

The other part of the initiative includes the sale of two million shares to a syndicate of underwriters.

Paramount Resources is an oil and natural gas company based in Calgary, Alta. Paramount's stock closed down C$0.68 at C$23.17 Monday.

The smaller of the Canadian deals is a C$3.25 million private placement from Majescor Resources.

That private placement will be comprised of 8.34 million in flow-through shares at a price of C$0.30 per share and three million non-flow-through units at C$0.25 per share.

Each non-flow-through unit will consist of one common share and one-half of a common share purchase warrant.

Each whole share purchase will be exercisable into one common share at C$0.35 for two years from the closing date.

The syndicate of agents on the deal, led by Canaccord Capital and including Dundee Securities Corp., will be paid a cash fee equal to 7.5% of the gross proceeds earned in the offering.

The syndicate will also receive agent warrants allowing for the purchase of that number of non-flow-through common shares equal to 8% of the offering at an exercise price of C$0.30 for two years.

The agents will have the right to over allot the non-flow-through portion of the deal by one million units.

Funds from the deal will be used for diamond exploration and working capital.

Majescor, based in Montreal, is a diamond exploration company. On Monday, the company's stock closed down C$0.015 at C$0.27.

Remote Dynamics wraps up $5 million preferreds

Back in the United States, Remote Dynamics Inc. has closed a $5 million private placement of series A preferred stock, the company announced Monday.

The series A preferred stock is convertible into common stock at a minimum conversion price of $2 per share. The series A holder also received structured warrants with a five-year term to purchase 1 million shares of common stock at an exercise price of $0.91 per share.

In the deal, the holder of the series A convertibles also received incentive warrants to purchase 625,000 shares of common stock with a five-year term exercisable starting Sept. 1, 2005.

The private placement, will allow the company to launch its new Automatic Vehicle Location software, according to president and chief executive officer Dennis R. Casey.

"The closing of this transaction paves the way for the launch in the first quarter of 2005 of our next generation AVL product, a fully featured system with the flexibility to meet a wide range of fleet-management and mobile-resource needs," Casey said in a statement. "We are pleased with the vote of confidence placed by our new investor and believe its resources, business contacts and familiarity with the AVL market make for a strong partner as Remote Dynamics continues to execute its business plan."

On the same day as closing on the placement, Remote Dynamics was hit with a written notice from Nasdaq after its stock closed for 30 days straight below the minimum $1 per share requirement for inclusion. The company's stock closed down $0.10 at $0.89 Monday.

Remote Dynamics, based in Richardson, Texas, sells and supports fleet-management solutions, such as global positioning systems and wireless vehicle information technology.

MainStreet aims to raise $1.65 million

MainStreet BankShares said it has started a private placement, hoping to sell 183,334 shares or $1.65 million of common stock.

The shares are being offered at $9 per share with a minimum purchase of $25,000. The sale runs through Oct. 31.

Through Sept. 30, MainStreet had sold 82,649 shares at $9 per share, for a total of $743,841, according to an 8-K filing with the Securities and Exchange Commission.

Funds raised through the private placement will be used primarily to support existing and projected loan growth at the company's Franklin Community Bank subsidiary through the end of this year.

The deal will be sold under the SEC's Rule 506, which allows for the sale of stock without registration to accredited investors and up to 35 nonaccredited investors.

Martinsville, Va.-based MainStreet is the parent of Smith River Community Bank, NA and Franklin Community Bank, NA.

PFF's $30 million trust preferreds

PFF Bancorp Inc. said Monday it issued $30 million in trust preferred securities late last week.

The private placement was part of a pooled transaction via Sandler O'Neill and Partners as placement agent.

The floating rate securities will mature on Nov. 23, 2034 and pay a coupon of three-month Libor plus 220 basis points.

The capital raised will provide resources for PFF Bancorp's higher yield "Four-Cs" lending - construction, commercial real estate, commercial businesses and consumer lending, according to a company news release.

PFF Bancorp is a Pomona, Calif.-based community bank with 24 branches throughout Southern California.

Also involved in the transaction were subsidiaries Glencrest Investment Advisors, PFF Bancorp's asset manager, and Diversified Builder Services, which finances homebuilders and developers for PFF Bancorp.

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