Oil prices continue to decline, may boost PIPE issuance; Plains All American pockets $28 million

By Sheri Kasprzak

New York, Oct. 6 - As oil prices continued to drop for the fourth straight session, declining to a two-month low, sellsiders in the PIPE industry said this could be good news for the broader U.S. private placement market.

Of course, there are other things to consider, like the long-term economic impacts of recent weather-related catastrophes, but things could be looking up for issuance, market sources insisted Thursday.

Oil closed down $1.43 to settle at $61.36 Thursday.

"When oil goes down, stocks generally go up," said one market source. "We know that's not always the case, but it's mostly the case. We saw stocks go up for a bit earlier today. There are other factors, for sure, but traditionally when oil has gone up, [PIPE] issuance has come down. I would expect the opposite to be true when oil's down. There is a precedent."

Another market source contends that there is an open window for issuers in certain sectors like biotechnology and technology. Stocks in those sectors, he said, have been performing very well and investor interest is high. But, when oil prices creep up, the private placement market in general tends to look less appealing.

"Even if you have the greatest company, the best potential, great drug candidates, if [the broader] stock market looks [bad], it'll be harder to get interest," he noted. "Now I think that will change a bit. There's a big window for them so if this trend [of falling oil prices] keeps up, we'll see more [offerings]."

Canadian issuance, however, could be hit by the dropping oil prices. The majority of PIPE issuance in Canada comes from oil and mineral offerings.

"They'll probably back away," said one Canadian market source familiar with natural resources when asked about issuers north of the border. "No doubt."

Moving to specific offerings from Thursday, Plains All American Pipeline LP wrapped a $28,001,960 offering of 679,000 common units with Kayne Anderson Capital Advisors, LP.

The offering was conducted along with a public offering in which the Houston-based company sold 5,175,000 common units at $42.20 each. The common units sold in the private offering were sold at $41.24 each.

As of Aug. 2, the company had 67,914,576 outstanding common units.

After the settlement of both deals was announced Thursday morning, Plains All American's stock lost $0.58, or 1.39%, to close at $41.24.

Proceeds from both offerings will be used to repay debt under a revolving credit facility. The rest will be used for general partnership purposes.

Back in February, the company completed a $21,924,750 private placement of 575,000 partnership units at $38.13 each.

Looking to the company's earnings, Plains All American's net income has improved over the second quarter of 2004.

For the quarter ended June 30, 2005, the company reported net income of $62,282,000, up from net income of $35,677,000 for the corresponding quarter of 2004.

Plains All American owns oil and natural gas pipelines and storage terminals.

pSivida raises $15 million

In its second private placement in the past two months, pSivida Ltd. said Thursday it has received an agreement from a New York-based institutional investor for $15 million in subordinated convertible debentures. The deal is expected to wrap in mid-November.

The 8% debentures mature in three years and are initially convertible into American Depositary Receipts at $7.10 each.

The investor will also receive warrants for 633,000 additional ADRs, exercisable at $7.20 each for six years.

Proceeds will be used for extended development of pSivida's platform technology.

"Revenue from CDS's [Control Delivery Systems] Retisert products and an expected BioSilicon licensing deal make convertible debt financing an appropriate strategy to meet our funding need in the short- to medium-term," said Gavin Rezos, the company's managing director, in a statement.

pSivida is acquiring Control Delivery Systems Inc., a Boston-based drug-delivery company.

On Thursday, the company's ADS slipped $0.08 to end at $6.01.

The company headed to the PIPE market back in August, selling 650,000 ADRs at $6.50 each to mostly U.S.-based investors.

In that offering, settled Aug. 24, each ADR represented 10 common shares and included an attached 1-for-10 warrant, exercisable at $12.50 each for three years.

Perth, Australia-based pSivida is a nanotechnology company focused on the biomedical sector.

Xfone settles $2 million offering

Xfone, Inc., a London-based company that completed a private placement of stock earlier this week, has concluded another PIPE deal.

The voice and data-services company sold $2 million in convertible notes to Laurus Master Fund, Ltd.

The notes mature in three years, bear interest at Prime rate plus 150 basis points and are convertible into common shares at $3.48 each.

Laurus also received warrants for 157,000 shares, exercisable at $3.80 each.

"Proceeds from this financing will allow Xfone to continue to advance its operations in the United States," said Guy Nissenson, Xfone's president and chief executive officer, in a statement. "This financing is a critical component driving the company's success strategy as we further broaden our stake in this growing marketplace."

The settlement was announced Thursday morning, and Xfone's stock gained $0.10 to close at $3.00.

On Monday, the company completed a $2,256,995 offering of 902,798 shares at $2.50 apiece. Investors for that deal received warrants for 451,399 shares. Half of those warrants are exercisable at $3.00 each and the other half at $3.25 each, expiring in five years.

Forsys prices C$10 million unit deal

In Canada, Forsys Metals Corp. led PIPE news there with the pricing of its C$10 million unit offering.

The Toronto-based mineral exploration company plans to sell 8,695,654 units at C$1.15 each.

The units consist of one share and one half-share warrant. The whole warrants allow for the purchase of another share at C$1.50 each for two years.

A syndicate of underwriters led by Sprott Securities Inc. has an over-allotment option for up to 1,739,130 units.

Proceeds will be used to develop the Valencia uranium deposit. The rest will be used for general corporate purposes.

Another mineral company, this one based in Calgary, Alta., announced that it is undertaking a C$1.53 million unit offering on Thursday.

Jasper Mining Corp. plans to sell up to 3.4 million units at C$0.45 each.

The units include one share and one half-share warrant. The whole warrants are exercisable at C$0.65 each for 18 months.

Some of the shares issued in the deal will be flow-through shares.

PYR stock drops 10.43%

PYR Energy Corp., after announcing the completion of a $5.2 million tranche of its ongoing private placement, saw its stock dive more than 10% on Thursday.

The company's stock lost $0.17 to end at $1.46 Thursday after slipping $0.10 on Wednesday to close at $1.65.

On Wednesday, the company announced that it had issued shares at $1.30 each.

PYR is a Denver-based oil and natural gas exploration company.

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