NewMarket Technology cancels proposed $5 million private placement

By Sheri Kasprzak

Atlanta, March 16 - NewMarket Technology Inc. said it has cancelled a proposed $5 million private placement announced in December.

The company had planned to raise $2 million in convertible preferred stock before filing a registration statement and raising an additional $3 million in an 8% promissory note after the registration statement was effective. The company entered into the $3 million agreement on Dec. 16 and the $2 million agreement on Dec. 23.

"For a number of reasons, NewMarket is not proceeding with this transaction," the company said in a letter to its shareholders Wednesday. "NewMarket has sourced an alternative financing arrangement that will satisfy our acquisition financing requirements and not require any additional NewMarket stock to be issued."

The company noted in the letter that the financing would be to fund acquisitions and would not have been used for working capital. The company now anticipates that it will invest $5 million in working capital into new acquisitions.

Even though the financing was partially funded, the proceeds were returned to the investors.

The company said in its letter to shareholders that there had been attempts made to restructure the $5 million offering.

"We suspect the negotiations to attempt to restructure the originally contemplated security financing agreement may have been prolonged on the part of one of the contemplated investors in an effort to protect a premature hedge position," the letter said. "Recognizing that NewMarket and the two contemplated investors executed and partially funded security financing agreements, it is possible that the investors might have hedged against the agreement.

"Our suspicion arises from an investor's aggressive unwillingness to consider a reduced investment amount that could have been entirely funded within five days of a registration statement being effective."

Based in Dallas, NewMarket produces software for internet protocol telephony. On Wednesday, the company's stock closed up $0.025 at $0.535.

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