U.S., Canadian volume lags on lower stocks, oil; Innovative Drug closes $18 million deal

By Sheri Kasprzak

Atlanta, Dec. 7 - Private placement volume both in the United States and in Canada sank Tuesday as oil prices dropped and stocks in both countries suffered losses.

Oil prices dove $1.52 Tuesday to close at $41.46 per barrel.

"That has definitely hurt volume here," said one Canadian market source. "With the lower oil comes lower energy stocks and that may keep some companies away from the market until things get better."

The S&P Toronto Stock Exchange Composite Index closed down 67.93 at 8,992.17 Tuesday.

In the United States, companies may have been waiting for a boost in stock prices as well, according to sell-side sources.

"It's just not a good market to be doing PIPEs today," said one source. "Stocks are down and that means companies that may be planning deals are going to hold off."

The Dow Jones Industrial Average dropped 106.48 Tuesday to close at 10,440.58. The Nasdaq was down 36.59 to end at 2,114.66 and the S&P 500 closed 13.18 lower to end at 1,177.07.

Leading private placement news in the United States Tuesday was an $18 million deal from Innovative Drug Delivery Systems Inc.

The New York-based specialty pharmaceutical company sold 6 million shares at $3 each. The deal follows news that the company merged with Intract Inc.

Investors in the private placement will receive about 24% of Intract's outstanding shares.

"I am pleased to reach this milestone in the development of our company," said Fred Mermelstein, Innovative Drug's president and chief executive officer, in a statement. "Institutional investment in our company strengthens our access to broad capital markets and facilitates our clinical development programs as they move towards commercialization."

Rodman & Renshaw LLC was the placement agent in the offering.

Based in New York, privately held Innovative Drug is a specialty pharmaceutical company.

CGI Holding closes deal

CGI Holding Corp. wrapped up a private placement for $15.05 million.

The company issued 4.3 million shares at $3.50 each.

Warrants were also issued the offering for an additional 2.365 million shares at $4.12 each.

"This financing provides us with the flexibility to pursue many of the highly accretive and strategic acquisition opportunities we continue to identify," said CGI's chief executive officer Gerald Jacobs, in a statement. "We have reached the breakout point in our strategy to expand CGI's businesses, revenues and profits."

CGI, based in Lake Bluff, Ill., is a holding company for WebSource Inc., a Morrisville, N.C.-based company the provides search engine optimization, pay-per-click campaign management and online dating services.

On Tuesday, CGI's stock closed up $0.18 at $4.30.

Details on Accesstel deal released

The details surrounding the $8 million private placement offering from Accesstel Inc. were revealed Tuesday.

The company is offering 1,955,990 restricted shares at $4.09 each.

The deal is priced at a 25% discount to market, according to Doug Glaser of DAG Enterprises. Glaser's company is the financial advisor in the offering.

The offering will be conducted over the next year.

"This is a strong package for this company," Glaser said in an interview Tuesday. "The company should do very well. As you can see, this company's shares are doing very well. We are, however, still looking at other financing options. We felt that a private placement would be an easy way to access funds."

Accesstel, which recently acquired a New Jersey-based textile company, plans use the proceeds from the private placement for working capital and to purchase a new textile knitting and dyeing plant.

On Tuesday, Accesstel's stock closed down $0.12 at $5.36. But it has been steadily higher in recent weeks and rose sharply from around the $0.25 level in late September.

Cambridge Heart wraps $5 million deal

Cambridge Heart Inc. closed a private placement of series B preferreds for $5 million in proceeds.

The company issued 5,000 shares of the series B preferreds at $1,000 each to new and current institutional and private investors.

The preferreds are convertible into a number of shares at $0.45 each.

The deal also included warrants for an additional 2,500 preferreds at $1,100 each, exercisable through Dec. 6, 2009.

The Bedford, Mass.-based Cambridge Heart develops noninvasive diagnostic tools for cardiac arrest and ventricular arrhythmia. It plans to use the proceeds from the offering to funds it ongoing operations.

The company's stock closed down $0.02 at $0.55 Tuesday.

Morgan Beaumont wraps offering

Morgan Beaumont Inc. completed a private placement of 7,125,000 shares at $0.20 for $1.425 million.

The funds from the offering had been held in escrow until Dec. 6.

Morgan Beaumont, based in Sarasota, Fla., provides prepaid credit cards under the Morgan Money Card and Morgan Stored Value MasterCard names. The company plans to use the proceeds from the deal for working capital.

The company's stock closed down $0.03 at $0.75 Tuesday.

Canadian offerings

Heading up private placement action north of the border, Chartwell Technology Inc. closed an C$11 million private placement.

The deal was upsized from a previously announced C$10 million offering through exercise of the greenshoe.

Chartwell issued 2,365,592 shares at C$4.65 each.

Underwriters Clarus Securities Inc. and Harris Partners Ltd. were the underwriters in the offering.

Chartwell is a Vancouver, B.C.-based company that manufactures internet gaming software. The company will use the proceeds from the private placement for general corporate purposes.

On Tuesday, the company's stock closed up C$0.25 at C$5.35.

Northern Sun upsizes deal

Northern Sun Exploration Co. Inc. will now raise C$7 million in a private placement, increased from the previously announced C$5 million offering.

Placement agent PowerOne Capital Markets Ltd. exercised a greenshoe in the deal for an additional 3 million flow-through units and an additional 909,090 non flow-through units. The deal will now be comprised of a total of 7 million flow-through units at C$0.55 each and 6,363,636 non flow-through units at C$0.55 each.

The flow-through units include one flow-through common share and one warrant. The warrant in the flow-through units allows for an additional share at C$0.65 for the first year and C$0.85 for the second.

The non flow-through units include one non flow-through share and one warrant. The non flow-through warrants allow for an additional share at C$0.65 for one year and C$0.85 for the second year.

Northern Sun is a Vancouver, B.C.-based petroleum and natural gas exploration company. It plans to use the proceeds from the offering to fund its exploration program on its joint-venture properties with the Kapawe'no First Nation in Alberta. The company will also use some of the funds for general working capital.

The company's stock closed down C$0.03 at C$0.50 Tuesday.

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