Volume remains low as issuers prepare new deals; Velocity Express raises $21 million

By Sheri Kasprzak

Atlanta, Jan. 5 - Private placement volume remained sluggish Wednesday as stocks remained down, oil prices dipped and issuers planned new deals.

Some sources said the low volume could be attributed to issuers determining how much money they need to raise in 2005.

"I would suggest that it takes a few days to a week or so to get everything ready for the new year," said one Canadian source of the low volume. "Everyone got the deals they needed to get done late last year. It will take a while to get everything going again as issuers have to figure out how much they need."

The source also said some Canadian firms that sold flow-through offerings last year had to close by the end of 2004.

"I'd agree that it will probably take a while for new deals to reach the market," said another source. "Most of the deals from last year have either closed or are closing now, so I think things will pick up soon."

Lower stocks also pushed volume down Wednesday. The Dow Jones Industrial Average was down 32.95 at 10,597.83, the Nasdaq composite ended 16.62 lower at 2,091.24 and the S&P 500 closed off 4.31 at 1,183.74.

Oil prices dropped $0.52 to end at $43.39 per barrel.

Topping private placement news in the United States was a $21 million closed deal from Velocity Express Corp.

The company issued to four institutional investors $21 million in 6% convertible notes. The notes are convertible, under certain conditions, into series M preferreds.

"The $21 million raised from this investor group will allow the company to make progress lowering costs, including corporate overhead, while continuing to meet the growing needs of our customers," said Vincent Wasik, Velocity's chief executive officer, in a statement.

Westport, Conn.-based Velocity provides technology infrastructure networks. It plans to use the proceeds from the deal to improve its operations with technology and additional management resources, to strengthen its balance sheet and to provide increase liquidity.

On Wednesday, the company's stock closed up $0.04 at $0.36.

SLS raises $15 million

SLS International wrapped up a $15 million in a private placement of series C convertible preferreds, the company said Wednesday.

The preferreds, which are initially convertible into common shares at $2.50 each and pay dividends of 6% annually, were sold to four institutional investors.

Warrants were also issued in the deal for 6 million shares at $6 each for five years.

"It seems like it's priced in line," said a market source. "I think it probably has more to do with the company than this particular market. The company is doing pretty well, it's expanding and investors like to see those kinds of things. It means the company has some stability."

The Shemano Group was the placement agent in the offering.

SLS, based in Springfield, Mo., manufactures and develops loudspeakers and sound systems for the commercial, home entertainment, professional and music markets. The proceeds from the deal will be used for a purchase option on the company's new production facility.

The company's stock closed up $0.05 at $2.70 on Wednesday.

Velocity Asset wraps deal

Velocity Asset Management Inc. closed a private placement for $3,363,529.

The company sold 2,242,353 units at $1.50 each. The units include one share and one one-fifth share warrant.

The whole warrants allow for an additional share at $2.50 each for five years.

Ramsey, N.J.-based Velocity is a short-term business credit company. The proceeds will be used to fund the purchase of additional portfolios in an effort to expand the company.

On Wednesday, the company's stock soared $0.69 at $4.24.

Quepasa raises $3 million

Quepasa Corp. didn't raise quite as much as it had anticipated. The Phoenix-based search engine company closed a private placement for $3 million.

The offering included 500,000 units at $6 each. The units are comprised of one share and one four-tenths of a warrant.

The warrants allow for an additional share at $4.50 each for two years.

Investors in the offering included Talkot Capital, Riggs Partners, Paulson Investment Corp. and Penfield Partners.

The pricing of the units was decreased from $6.25 to $6. The offering, announced Nov. 30, was originally planned for up to $3.125 million.

Quepasa provides paid search engine services for the Latin-American community.

The company's stock closed down $0.06 at $4.39 Wednesday.

Nestor's $3.1 million deal

Nestor Partners Inc. said Wednesday it has completed a private placement of limited partnership interests for $3,100,874.

The offering, originally announced Nov. 1, was initially for $2,901,635.

The limited partnership interests were sold to existing and limited partners.

Nestor is a Providence, R.I.-based software company.

On Wednesday, the company's stock closed up $0.50 at $5.40.

Unigene raises $2.5 million

Unigene Laboratories Inc. closed a private placement offering for $2,500,002.

The company sold 1,302,140 shares at about $1.91 each to one institutional investor.

Based in Fairfield, N.J., Unigene manufactures injectable calcitonin products to prevent bone loss.

The company's stock closed down $0.21 at $2.31.

Shelron closes deal

Shelron Group Inc. sold 18.5 million shares in a private placement to one investor at $0.081.

The offering brought in a total of $1.5 million in proceeds for the company.

Based in New York, Shelron Group develops business-intelligence software and e-business marketing products.

Shelron's stock closed up $0.008 at $0.128 Wednesday.

Infinium wraps $1.16 million deal

Infinium Labs Inc. raised $1.16 million in a private placement of debentures.

The company issued 8% convertible debentures with a maturity of Dec. 16, 2005.

The debentures are convertible into common shares at a price equal to 75% of the lowest closing price for five trading days before conversion with a $0.10 ceiling.

Infinium also issued class A warrants for 5,437,487 shares at $0.10 each, class B warrants for 5,437,487 shares at $0.75 each and class C warrants for 5,437,487 shares at $1 each. The warrants expire Dec. 31, 2009.

Infinium is a Sarasota, Fla.-based company that produces video game consoles.

The company's stock closed down $0.17 at $1.42 on Wednesday.

Canadian offerings

Spider Resources Inc. led Canadian private placement offerings Wednesday with news that it wrapped a private placement for C$1,516,046.

The company sold 8,917,918 units at C$0.17 each. The units include one flow-through share and one warrant.

The warrants allow for an additional share at C$0.19 each through Dec. 30, 2006.

Toronto-based Spider is a diamond exploration and development company. It plans to use the proceeds from the offering to advance exploration programs.

On Wednesday, Spider's stock closed up C$0.005 at C$0.155.

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