ADA-ES CFO says $13.4 million PIPE is priced 'in line'; Chromos plans C$6 million deal for acquisition

By Sheri Kasprzak

New York, Oct. 26 - ADA-ES, Inc. settled a $13,414,513 private placement on Wednesday to lead PIPE news, and the company's chief financial officer said in an interview that he feels the deal is "right in line" with the market.

The company issued 789,089 shares at $17.00 each to a group of new and existing institutional investors. The Littleton, Colo.-based company had 4,817,018 common shares outstanding as of Aug. 5.

After the offering was announced Wednesday morning, the company's stock lost $0.50, or 2.58%, to end at $18.89.

Despite the fact that the offering is a 12.3% discount to the company's closing stock price of $19.39 on Tuesday, ADA-ES's chief financial officer Mark McKinnies said in an interview Wednesday that he feels the discount is not substantial.

"We always wish it would price higher, but based on what we've seen in the market, the discount to market is right in line," he said. "There's not a lot of liquidity in the company, there's not a lot of trading exposure. Overall, we're very pleased with the transaction."

McKinnies said the company chose to conduct a private placement because of the "ease and relative low cost and the speed in which we were able to close."

Pritchard Capital Partners, LLC and Adams Harkness, Inc. were the placement agents.

Pritchard was the placement agent on the company's last private placement offering back in August 2004.

In that offering, ADA-ES issued 1 million shares at $8.00 each, McKinnies said.

Though the company has no specific projects for which the proceeds from the offering will be used, McKinnies said the proceeds will help fund growth in the ADA-ES's mercury emissions controls business.

"This capital infusion will afford the company a great degree of flexibility to capture additional value throughout the various elements of the growing commercial mercury control market, including engineering services, equipment supply and participation in the need for expanded activated carbon production," said Mike Durham, the company's president, in a statement. "This new market is growing rapidly as a result of state consent decrees and regulations, the development of new coal-fired power plants and pending federal regulations."

For the quarter ended June 30, the company reported net income of $107,000, up from net income of $41,000 for the same quarter of 2004.

ADA-ES develops and implements environmental technology and specialty chemicals used to mitigate the environmental impact of electric power and industrial companies.

Chromos to raise up to C$10 million

Moving to the biotech sector, Chromos Molecular Systems Inc. intends to undertake a private placement for up to C$10 million and at least C$6 million as part of its acquisition of Targeted Molecules Corp., a San Diego-based biotechnology company focused on treatments for multiple sclerosis.

Chromos will sell up to 50 million and at least 30 million units at C$0.20 each to a group of investors led by Neuro Discovery LP.

The units are comprised of one share and one warrant. The warrants are exercisable at C$0.25 each for two years.

Both the merger and the PIPE were announced Wednesday morning, and the company's stock gained 11.11%, or $0.02, to finish the day at $0.20.

Under the terms of the merger, Chromos will acquire all of Targeted's outstanding shares at C$0.0284 each. The total cash consideration payable to Targeted Molecules' shareholders is C$740,000.

Once the merger is completed, new investors and existing Chromos shareholders will own 63% of the merged company and existing Targeted Molecules shareholders will own 29%.

"The TMC biopharmaceutical product candidates we acquire, coupled to the financing that results from this transaction, places Chromos on the path to clinical product development," said Alistair Duncan, the company's chief executive officer, in a statement. "In addition, by combining the technology advantages of our ACE [Artificial Chromosome Expression] System with our expertise in making and working with cell lines that express monoclonal antibodies, we will be able to accelerate the path of these candidates into the clinic."

Duncan said in the statement that he anticipates an increase in revenues from licensing the company's platform technologies.

Looking to Chromos's earnings, the company reported revenues of C$2.1 million through its cell line engineering business for the six months ended June 30, compared to C$200,000 for the same period of 2004. For the quarter ended June 30, the company sustained a net loss of C$983,842 compared to a net loss of C$1,392,966 for the same quarter of 2004.

Based in Burnaby, B.C., Chromos is a cellular engineering and therapeutics company focused on cell lines for use in biopharmaceuticals and biological therapies.

Mission Oil leads Canadians

Heading north of the border, Mission Oil & Gas Inc. arranged a C$94.27 million PIPE as part of its acquisition of Bison Resources Ltd.

The Calgary, Alta.-based oil and natural gas explorer intends to sell 11.3 million subscription receipts at C$7.90 apiece and 500,000 flow-through shares at C$10.00 each.

The deal is being placed through a syndicate of underwriters led by Orion Securities Inc. and CIBC World Markets Inc.

The receipts are exchangeable on a one-for-one basis for common shares once the company completes its acquisition of Bison.

After the offering was announced late Wednesday, Mission's stock slipped C$0.12 to end at C$8.48.

Proceeds from the offering will be used for capital growth on the Bakken property and for ongoing exploration at the Peace River Arch property.

Under the terms of the Bison acquisition, Mission plans to purchase all of Bison's outstanding common shares at C$8.65 each. A total of 4,270,105 Mission shares will be issued to Bison shareholders.

In the broader energy sector, a third-quarter surge in ConocoPhillips' profit and continuing worries over winter heating oil supplies may boost PIPE activity among energy companies in both the United States and Canada, one Canadian sellsider said.

"I think the fact that ConocoPhillips saw their profit surge may pique investor interest in others [oil companies]," said the market source.

Even though oil prices retreated on Wednesday, the sellside source said he feels concerns over oil supplies for this winter may mean more gains in oil prices in the long run.

"It's down now, but look for it to go back up and probably sooner rather than later," he said.

Oil prices dropped $1.78 to end at $60.66 Wednesday.

Elsewhere in Canada, Jovian Capital Corp. announced its intentions to raise C$25 million in a stock deal.

The offering, being placed through agents Genuity Capital Markets and MGI Securities Inc., has not yet been priced, but is slated to close before the end of November.

Proceeds will be used for future acquisitions, debt repayment and internal growth.

Toronto-based Jovian is a wealth- and asset-management firm.

The company's stock slipped C$0.05, or 5.88%, to close at C$0.80 Wednesday.

Innovative Card stock jumps 36.6%

Innovative Card Technologies, Inc.'s stock soared 36.6% on Wednesday, a day after the company wrapped a $6.5 million unit offering.

The Los Angeles-based company's stock gained $0.75 to end the day at $2.80.

On Tuesday, the company sealed a $6.5 million offering of 6.5 million units through placement agent T.R. Winston & Co. Innovative's stock closed unchanged Tuesday at $2.05.

Innovative Card Technologies develops power inlay technology used to power applications on credit cards and other information-bearing plastic cards.

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