Private placement volume stalls on lower stocks; China Yuchai plans $25 million deal

By Sheri Kasprzak

Atlanta, Feb. 7 - Private placement volume took a dip Monday as stock dropped and oil prices plummeted.

"I think issuers are out there, they're probably just waiting for stocks to improve a bit," said one market source. "I don't see anything else that could be keeping issuance down."

"Stocks are definitely the culprit," said another sell-sider. "Once market conditions improve, I think other factors are very favorable for issuance. A lot of companies conduct deals as part of their M&A [merger and acquisition] activity."

The Dow Jones Industrial Average ended the day down 0.37 at 10,715.76; the Nasdaq composite index was down 4.63 to end at 2,082.03 and the S&P 500 closed out the day down 1.31 at 1,201.72.

Oil prices also took a dive Monday, ending the day off $1.20 at $45.28 per barrel.

"Oil's down, so that does affect volume," said one Canadian market source. "Energy stocks obviously get a boost from oil, so that's dragging volume down quite a bit today. I think things will pick up."

Leading activity Monday was a $25 million offering from China Yuchai International Ltd. The offering, in the form of a convertible bond, is being conducted as part of the company's acquisition of a stake in Thakral Corp. Ltd.

The bond bears interest at 2% annually, matures in 2012 and is convertible into 1,927,673 common shares at $12.969 each.

China Yuchai's acquisition of the stake in Thakral is expected to cost about S$30.89 million.

Thakral trades and distributes consumer electronic products and accessories in China and Hong Kong.

China Yuchai plans to subscribe for 264 million shares of Thakral at an issue price of S$0.117, a 9.7% discount to the weighted average trading price on Feb. 4.

According to a statement from China Yuchai, the acquisition will allow it to capitalize on China's expanding economy and will allow for further expansion in the consumer electronics sector in China and other parts of Asia.

China Yuchai, based in Singapore, manufactures diesel motors.

The company's stock closed unchanged Monday at $1.05.

Strat gets $20 million equity line

Strat Petroleum, Ltd. received a $20 million equity line from The Nutmeg Group LLC.

Strat may sell shares to Nutmeg over two years at its discretion at a 7.5% discount to the lowest daily volume weighted average price for five days after notice.

Strat may draw up to 200% of its average daily volume over 10 trading days per request.

"We are delighted to have signed these agreements that give us the option to draw down over $20 million over the next two years," said Strat's president and chief executive officer H. Sam Hyams in a statement.

"The advantage of this method of structured financing is that although the funds are secured and available to us, any draw down of the facility will be totally at our discretion. We expect these funds to enable us to close several opportunities, including Orenburg, on our upcoming trip to the Russian Federation. The completion of acquisition of the 49% interest of the Rozhdestvenskoe oil site is the primary focus for Strat Petroleum."

Toronto-based Strat is an oil exploration company.

On Monday, Strat's stock closed up $0.02 at $0.18.

Multiband closes $10 million placement

Multiband Corp. said it has closed a private placement for $10 million.

The company sold series I convertible preferred stock to Mercator Advisory Group LLC through Monarch Pointe Fund Ltd., Mercator Momentum Fund LP, Mercator Momentum Fund III LP and other investors.

The preferreds pay annual dividends equal to a range between Prime plus 1,000 basis points during the first seven months and at Prime after that. The preferreds are convertible into common shares at $1.50 each.

"It's a good deal," said one market source. "This company is pretty strong, it's making some good acquisitions. [The deal is] priced at a small discount and the warrants are really where they're going to do well."

The investors will also receive warrants for 7,142,858 shares at $1.57 and $1.73 each for three years.

"The receipt of this capital will allow Multiband to continue its impressive ramp up in both organic- and acquisition-based growth strategies," said Multiband's chief executive officer James Mandel in a statement. "We are anxious to move on to a new level of activity."

HC Wainwright & Co. LLC was the placement agent in the offering.

Based in New Hope, Minn., Multiband provides voice, data and video systems and services to businesses, governments and multiple dwelling units. The company plans to use the proceeds for the expansion of its network.

On Monday, the company's stock closed down $0.10 at $1.52.

CV Therapeutics suffers losses

After making significant stock gains Friday on word that it received $25,000,108 from Acqua Welling North American Equities Fund Ltd., CV Therapeutics Inc.'s stock dropped Monday.

The company's stock closed down $0.42 at $22 Monday. On Friday, CV Therapeutics' stock soared $0.95 to end at $22.42.

In the private placement, which is part of a $100 million equity purchase agreement between CV Therapeutics and Acqua Wellington, CV Therapeutics sold 1,275,711 shares at $19.597 each.

CV Therapeutics, based in Palo Alto, Calif., develops drugs to treat certain types of cancers.

Basic Empire's continues to gain

After Basic Empire's merger with China Tailong Holdings Co., Ltd. and the closing of a $1 million private placement last week, the company's stock continued to make gains Monday.

Basic Empire's stock gained $0.10 to close at $4.05 Monday.

On Friday, the company's stock ended $0.45 higher at $3.95.

Immediately after the merger was announced, the company's stock skyrocketed $3.40.

Basic Empire's stock was trading at $0.10 on Feb. 2, just a day before the merger.

In the merger, 10,606,158 shares of Basic Empire were issued to Tailong's stockholders, representing 90% of the company's issued and outstanding shares.

Based in Midland, Texas, Basic Empire will now manufacture compound liquid fertilizer products.

Active Power's stock drops

After announcing that it had closed a $19,854,416 private placement last week, Active Power, Inc.'s stock took a dive.

On Monday, the company's stock closed down $0.06 to end at $3.70. Active Power's stock closed down $0.22 at $3.84 on Friday after the closing was announced.

In the private placement, Active Power sold 5,454,510 shares at $3.64 each.

Based in Austin, Texas, Active Power designs, manufactures and markets battery-free backup power products.

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