HyperSpace raises $4.55 million from convertibles; Akorn wraps $3.56 million stock sale

By Sheri Kasprzak

New York, Sept. 8 - The PIPE market closed the week with relatively light volume even as stocks rebounded on lower oil prices.

"From all I can tell, oil prices are probably going to stabilize pretty soon," said one sellside market source. "That could mean more [volume] and pretty soon. In the next week, I think you'll probably see more from biotech."

One sellsider based in Vancouver, B.C., said oil offerings have been markedly off as Canadian stocks suffered on lower oil and mineral prices.

"We're taking a beating," he said.

Oil prices were down by $1.07 on Friday to close the session at $66.25 per barrel.

A tech company, HyperSpace Communications, Inc., led private placement action on Friday, closing a $4.55 million offering of convertible debentures and announcing an extension on its $25 million revolving credit facility.

News of the extended credit facility and the new $4.55 million cash infusion sent the company's stock up by 30.77%, or 40 cents, to end the session at $1.70 (Amex: HCO).

The debentures are convertible at $0.75 each. The full terms of the debentures could not be determined by press time Friday evening.

The investors also received warrants for 2,275,000 shares, exercisable at $1.10 each.

Investors who purchased $5 million in convertible debentures in April 2006 will roll those debentures plus interest into the new debentures.

As a condition of extending its current credit facility with Wachovia Capital Finance Corp., HyperSpace was required to raise $4.7 million by Nov. 28, 2006.

The facility was extended to Jan. 17, 2007.

Proceeds from the placement will be used for debt reduction and working capital.

HyperSpace has visited the PIPE market before for capital. The company settled a $5 million offering of convertible debentures with Toibb Investment LLC and Crestview Capital Master, LLC in April. The 10% debentures sold in that deal are convertible at $3.12 each.

After the deal closed April 28, the stock gained 9 cents to end at $2.95.

Looking to HyperSpace's latest earnings statement, the company incurred a net loss of $19.11 million for the quarter ended June 30, compared with a net loss of $661,000 for the same quarter of 2005.

"Management's plans to continue operations in the ordinary course assume the successful private placement in the near future and the successful replacement of the company's current asset-based lending facility," said the earnings statement.

"These plans along with continued vendor support through continued or increased credit lines, minimal cancellations of the company's backlog and successful implementation of previously announced cost-cutting initiatives are expected to be adequate to fund the company's operations for at least the next 12 months."

Denver-based HyperSpace provides IT hardware for mid-sized companies, government agencies and education organizations.

Akorn's $3.56 million deal

Elsewhere in PIPEs, Akorn, Inc. concluded a private placement of its stock with the Serum Institute of India for $3.56 million.

Serum purchased 1 million shares of Akorn at a price equal to the company's closing stock price on Thursday.

Akorn's stock gained 11 cents, or 3.09%, to end the session at $3.67 (Amex: AKN).

"This equity investment by Serum serves to further solidify our long-term strategic partnership," Akorn chief executive officer Arthur Przybyl said in a news release. "Both companies intend to further expand our business relationship in the near term. Additionally, Akorn's board of directors intends to nominate Dr. Subash Kapre, executive director with Serum Institute of India, for inclusion on our board."

The two companies entered into a drug development and distribution agreement for oncology and other injectable products in October 2004.

Buffalo Grove, Ill.-based Akorn develops sterile ophthalmic pharmaceuticals.

Neo Alliance plans PIPE

As gold prices continued to fall Friday, Neo Alliance Minerals Inc. negotiated a private placement of units for up to C$3 million.

Gold prices on Friday gave up $8.10 to close at $616.80 per ounce.

In the non-brokered placement, Neo Alliance plans to sell up to 6 million units of one share and one half-share warrant. The whole warrants are exercisable at C$0.65 each for 18 months.

The offering is scheduled to close Oct. 9.

Neo Alliance's stock dipped by 2 cents, or 3.33%, to close at C$0.58 (TSX Venture: NAM).

The company may conduct another C$2 million private placement in the future.

The proceeds from this deal will be used for exploration on the Majiahe property and the Xuefeng property as well as for the acquisition of gold properties in China.

Edmonton, Alta.-based Neo Alliance is a gold exploration company focused on properties in China.

In other gold news, Azco Mining Inc. saw its stock dip a day after wrapping a $1 million private placement of senior secured convertible notes.

The stock lost 2 cents, or 1.96%, to close at $1.00 (OTCBB: AZMN). On Thursday, the stock fell by 5 cents, or 4.67%, to end at $1.02.

The 7% Azco notes are due Jan. 1, 2008 and are convertible into common shares at $1.00 each.

The conversion price is a 6.5% discount to the company's $1.07 closing stock price on Wednesday.

Based in Glendale, Ariz., Azco is a gold, copper and industrial minerals exploration company.

Aurora stock dips

In other Canadian PIPE news, Aurora Energy Resources Inc. watched its stock fall on Friday after planning two private placements totaling C$40 million.

The company's stock lost 11 cents, or 1.1%, to end at C$9.90 (Toronto: AXU) on Friday. The stock closed down 69 cents on Thursday to end at C$10.01.

Volume of the shares traded also remained elevated on Friday, with 954,240 shares traded compared to the average 279,273 shares. On Thursday, the volume of shares traded jumped, with 1,256,910 shares traded compared with the average of 260,464 shares.

In the first placement, the company plans to sell non flow-through shares at C$10.45 each and flow-through shares at C$12.55 each.

The non flow-through shares are priced at a 2.3% discount to the company's C$10.70 closing stock price on Wednesday and the flow-through shares are priced at 17.2% premium to the same closing stock price.

The deal is being placed through an underwriting syndicate led by Sprott Securities Inc.

The offering set to close concurrently with this deal includes non flow-through shares at C$10.45 each.

The two deals are slated to close Sept. 28.

Proceeds from the flow-through shares will be used for exploration on the company's Canadian properties. The rest will be used for exploration on the company's Michelin and Jacques Lake deposits, for additional exploration on the Central Mineral Belt of Labrador and for general corporate purposes.

Aurora, based in Vancouver, B.C., is a uranium exploration company.

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