Holly Energy arranges $35 million private placement; volume weakens on lackluster stock gains

By Sheri Kasprzak

Atlanta June 13 - Holly Energy Partners LP led relatively scarce private placement activity Monday as stocks made only slight gains.

Holly Energy said it plans to sell up to $35 million in stock to fund the cash portion of its acquisition of an intermediate feedstock pipeline that will connect its Lovington, N.M., and Artesia, N.M., refineries. The pipeline is being purchased from Holly Corp. and is expected to cost $81.5 million

The 1.2 million shares Holly Energy plans to sell to institutional investors are priced at $29.166, a 33% discount to the company's closing stock price of $43.40 on Monday.

After the deal was announced late Monday, Holly Energy's gained $0.50, or 1.17%.

"This transaction fits well into our strategy of disciplined growth for Holly Energy," said the company's chairman and chief executive officer Matt Clifton in a statement. "It will be an immediately accretive transaction for unitholders made at an attractive valuation multiple."

Based in Dallas, Holly Energy provides refined petroleum product transportation and terminal services. Holly Corp., also based in Dallas, is a petroleum refiner.

In the broader private placement market, sell-siders said less-than-spectacular stock gains and a slight dip in oil prices may have adversely affected volume Monday.

"I just don't think the gains we saw today were enough to cut it," said one market source.

It is the second trading day in a row that stocks have made either meager gains or slight losses.

The Dow Jones Industrial Average edged up 9.93 to close at 10,522.56; the Nasdaq composite index gained 5.96 to close at 2,068.96 and the S&P 500 closed up 2.71 at 1,200.82.

"Let's face it," said another sell-sider. "We've seen neither staggering gains nor horrible losses for the last two sessions, and those are really the kinds of things that either push lots of volume or keep issuers out. So I wouldn't say volume is necessarily off that much, but the issuers aren't exactly knocking down doors to do deals either. It's [volume] off a bit, but nothing to get hysterical over."

Back to oil, prices retreated $0.24 after making early gains to close at $53.30 per barrel on news that the Organization for Petroleum Exporting Countries was gearing up to meet later this week.

"It will have an effect, at least for today," said one Canadian sell-sider, on the lower oil prices' effect on issuance among Canadian oil exploration companies. "I imagine oil will probably continue a downward trend until the OPEC meeting Wednesday."

Moving back to specific oil-related deals, Carrizo Oil & Gas, Inc., a Houston-based oil exploration company, announced the closing of an $18.3 million private placement Monday.

The company sold 1.2 million shares at $15.25 each.

The company plans to use the proceeds from the deal to fund drilling programs on the Barnett Shale and onshore Gulf Coast areas. The remainder will be used for general corporate purposes.

Primaris's C$40 million offering

Over in Canada, Primaris Retail Real Estate Investment Trust is gearing up to close a C$40 million private placement of exchangeable securities.

The company sold 2,849,002.849 securities at C$14.04 each to five private investors who own a property the company is buying.

The securities, which have a mandatory exchange provision with a 20-year term, are exchangeable on a one-for-one basis for trust units.

Primaris said it plans to acquire the Place Fleur de Lys property owned by the investors of the offering by July 20.

Based in Toronto, Primaris is a real estate investment trust.

The company's stock closed up C$0.28 at C$14.73 Monday.

North American Gold closes deal

Vancouver, B.C.'s North American Gold Inc. finished the final tranche of a C$3,576,914 private placement.

In the last closing, the company sold a total of 4,886,219 at C$0.45 each - 2,572,222 units on a brokered basis through agent Pacific International Securities Inc. and 2,313,997 on a non-brokered basis - for a total of C$2,198,798.

The units include one share and one half-share warrant. The whole warrants allow for an additional share at C$0.45 each for one year.

The first tranche of the deal was closed in May.

According to one market source familiar with gold, the metal's prices hit their highest level in the month on Friday.

"If there's a demand, we could see more gold deals in the coming days," said the market source.

"I'm delighted that we were able to raise more than we had planned in this financing, particularly in view of the recent difficult market conditions," said Buck Morrow, the company's president, in a statement. "It says a lot about the quality of our project portfolio and the technical programs that we have planned for the coming months that we were oversubscribed by close to a million dollars."

North American had originally planned to raise C$2.7 million in on offering of 6 million units under the same terms.

Based in Vancouver, B.C., North American is a gold exploration company. It plans to use the proceeds to advance the exploration and evaluation of the company's Norra-Barsele project in Sweden. The remainder will be used for working capital.

Western Power's stock climbs

Two business days after announcing the closing of a $32 million private placement, Western Power & Equipment Corp.'s stock edged up.

The company's stock gained $0.08, or 6.5%, to close at $1.31 Monday.

On Friday, the day after the closing was announced, Western Power's stock slipped $0.10 to close at $1.23.

The company sold $30 million in convertible debt with a conversion price of $2 each. The remaining $2 million was raised through a term loan.

Vancouver, Wash.-based Western Power provides construction and industrial equipment and materials to contracting companies.

CanArgo's stock still up

After raising $25 million in a loan note offering with an existing shareholder, CanArgo Energy Corp.'s stock continued to make gains Monday.

The company's stock closed up $0.20, or 21.05%, at $1.15 Monday.

On Friday, the company's stock gained $0.13, or 15.85%, to close at $0.95 and on Thursday, when the deal was first announced, the company's stock climbed $0.08, or 10.81%, to end at $0.82.

A market source who has been following the offering has said the company was able to price the deal at a premium because the loan note was being sold to an existing investor.

The New York-based oil exploration company sold loan notes convertible into common shares at $0.90 each.

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