U.S. PIPE volume settles down on lackluster stocks; Brillian raises $7 million in debenture offerings

By Sheri Kasprzak

New York, July 12 - Volume in the U.S. PIPE market took a slight dip Tuesday as stocks finished with only slight gains on the whole.

"Stocks were off a bit," said one market source. "Nothing else I can really point to. It just comes and goes sometimes."

Volume in Canada, however, was another story, with several resources offerings introduced both late Monday and into Tuesday.

"Minerals got a boost from better stocks [in that sector]," said one Canadian market source. "Gold seems to be slowly making a comeback, so expect to see some of those. I didn't see too much in oil today, but I expect to see some."

In fact, oil prices shot up Tuesday following damage reports from oilrigs hit by Hurricane Dennis this past weekend.

Oil jumped $1.70 to close at $60.62 per barrel.

Moving back to the United States, Brillian Corp. led private placement news here with the closing of a $7 million debenture offering.

Brillian sold $5 million in convertible debentures and $2,075,000 in senior secured debentures, priced at 96, for proceeds of $2 million.

The convertible debentures bear interest at 4% annually, are convertible into common shares at $2.63 each and are due on July 12, 2008.

The senior secured debentures are also due on July 12, 2008 and bear interest at 9% annually.

The investors of the convertible and senior secured debentures also received warrants for 1.37 million shares, exercisable for five years. The strike price of the warrants could not be obtained by press time Tuesday.

The closing was announced late Tuesday and the company's stock slipped $0.03 to close at $3.01, but gained $0.69, or 22.92%, in after-hours trading.

"Our momentum continues to build with volume manufacturing and supply chain progress, excellent product reviews and an earlier-than-expected ability to reduce [manufacturer suggested retail price] on the Brillian 720p HDTV monitor," said Vincent Sollitto, the company's president and chief executive officer, in a statement. "Closing this financing round is another very positive step forward. The proceeds from this transaction will strengthen our cash position and provide added funding for volume manufacturing of our light engines and HDTVs."

Brillian was most recently in the news when Nasdaq accused the company of not complying with stockholder approval requirements from the sale of $2.5 million in convertible debentures completed in April. Nasdaq alleges that Brillian did not seek shareholder approval for the offering, even though the issuance, upon conversion, of the debentures and warrants would be greater than 20% of the company's total outstanding shares.

Brillian has said it is in the process of correcting the issue.

According to its most recent earnings statement, the company has "never been profitable." The company's net loss for the quarter ending March 31, 2005 was $5.3 million. In the year ending Dec. 31, 2004, the company lost $32.9 million and has had losing years since 2002.

As of April 30, the company had 6,935,335 outstanding shares.

Based in Tempe, Ariz., Brillian manufactures rear-projection high definition televisions for retailers.

New Dragon raises $6 million

A company with a more international flavor, New Dragon Asia Corp., completed a preferred stock offering for $6 million on Tuesday.

The company issued series A convertible preferred shares to two institutional investors.

The preferreds pay annual dividends at 7% and are convertible into a total of 6,315,789 class A common shares at $0.95 each.

The investors received warrants for 3,157,895 class A common shares at $1.04 each for six years. TN Capital Equities, Ltd. was the placement agent.

"The completion of this financing will enable the company to continue its acquisition program, focusing on the numerous opportunities within the food industry in China," said Peter Mak, the company's chief financial officer, in a statement. "In addition, the financing will be utilized for general corporate purposes and to support our commitment to entering strategic alliances with multi-national food processing organizations.

New Dragon, based in Shenzhen, China, mills, sells and distributes flour- and soybean-derived products in China.

The company's stock closed down $0.02 at $1.02 Tuesday.

Committee Bay's C$6 million offering

North of the border, Committee Bay Resources Ltd. announced its plans to raise up to C$6 million in a flow-through and non flow-through unit offering.

The deal includes up to 8 million units, both flow-through and common, at C$0.75 each.

The units include one share and one warrant. The warrants provide for an additional share at C$1 each for two years.

A syndicate of placement agents led by Canaccord Capital Corp. has an over-allotment option for up to C$2 million in additional proceeds.

"Gold got a shot in the arm today," said one market source familiar with natural resource companies. "I think it will benefit them. Gold had been kind of on a downtick, but seems to be recovering."

The company's stock closed unchanged at C$0.76 on Tuesday. The offering was announced Tuesday afternoon.

A portion of the proceeds will be used to advance funds to Matador Exploration Ltd., the company Committee Bay acquired on Tuesday. Committee Bay intends to issue a C$6 million convertible debenture to Matador. The debenture matures in two years, bears interest at 5% annually and is convertible into units of one share and one warrant at C$0.55 each.

The remainder of the proceeds raised from the unit offering will be used for mineral exploration projects in northern Canada and working capital.

Based in Vancouver, B.C., Committee Bay is a gold exploration company. Matador is also a gold exploration company.

Holly Energy's stock rises

A day after closing a $45.1 million private placement, Dallas-based Holly Energy Partners, LP's stock made gains.

The company's stock closed up $0.32 at $43.50 on Tuesday.

On Monday, when the closing was first announced, the company's stock gained $0.08 to end at $43.18.

The company sold units at $41 each to institutional investors to fund its previously announced acquisition of a feedstock pipeline from Holly Corp.

Holly Energy is a refined petroleum product transportation and terminal services company. Holly Corp. is a petroleum refining company.

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