Avanir closes increased direct placement for $17.1 million; issuance pushed down by weak stocks

By Sheri Kasprzak

Atlanta, April 12 - Avanir Pharmaceuticals Inc. led news Tuesday with word that it had closed its previously announced direct placement for $17,094,000.

The company sold 7.77 million class A shares at a higher price than originally announced on April 5.

The shares were sold at $2.20 each, up from the originally announced $2.07. The number of shares in the deal did not change.

The shares were sold under Avanir's shelf registration.

CIBC World Markets Corp. was the book runner and Leerink Swann & Co. the co-placement agent.

The day after the offering was first announced - April 6 - the company's stock lost $0.07 to close at $2.40. On Tuesday, the company's stock gained $0.07 to close at $2.54.

The news of the upsized offering comes just a day after analysts at Rodman & Renshaw LLC reiterated their market outperform rating and dropped the company's target price to $7.50 from $8.

Based in San Diego, Avanir is a pharmaceutical company focused on treatments of chronic illnesses.

Elsewhere in the market, sell-siders said volume was dragged down by depressed stocks over the course of most of the day. Even though the major indexes closed up Tuesday, market sources said issuers were watching - and that yesterday's stocks affected issuance as well.

"Issuers watch the stock market," said one sell-side source. "Stocks were down for most of the day and that definitely affected them. I'd say lower stocks yesterday probably didn't help things."

Thanks to a late-day rally, the Dow Jones Industrial Average closed Tuesday's session up 59.41 at 10,507.97; the Nasdaq composite index was up 13.28 to close at 2,005.40 and the S&P 500 ended the day up 1,187.76.

A drop in oil prices Tuesday also didn't help things among Canadian issuers, sources there said.

The majority of private placements there have been conducted by energy companies.

"Well, energy companies aren't exactly knocking down doors to do private placements right now," said one Canadian source, jokingly.

Oil dove $1.85 to close at $51.86 per barrel.

Stratic upsizes deal to C$15 million

Back to private placements, Stratic Energy Corp. upsized its previously announced private placement to C$15 million from C$10 million.

The company will now sell 15,789,474 shares at C$0.95 each.

In a statement released Tuesday, Stratic said the size of the deal was increased to keep up with investor demand.

"I think the company's appeal to investors is probably key in the decision to increase the size of this deal," said a market source following the offering. "Obviously the pricing looks fair and they've even said themselves that investor demand has been good, so I think it will turn out well for them."

The source had mentioned when the offering was first announced Monday that the Stratic has made certain strategic moves that may encourage investor interest in deals like this one.

Among those strategic moves are drilling contracts into which Stratic recently entered with some oil providers in the Middle East.

The deal was first announced April 11 and then included 10,526,316 shares at C$0.95 each.

GMP Securities Ltd. and Haywood Securities Inc. co-lead an underwriting syndicate placing the deal.

The offering is expected to close April 28.

Based in Calgary, Alta., Stratic is an oil and natural gas exploration, development and acquisition company. It plans to use the proceeds for the exploration and development of its properties and working capital.

On Tuesday, the company's stock closed down C$0.06 at C$0.98.

Recom wraps $3 million offering

Recom Managed Systems, Inc. wrapped a $3 million private placement Tuesday, marking the second private placement the company closed this month.

The company issued 937,500 shares at $3.20 each to one institutional investor.

Recom also issued warrants for 900,000 shares, exercisable at $1.60 each.

On April 1, the company raised $5 million in a private placement under the same terms.

"The warrants bother me a lot," said one market source who has been following Recom's private placements.

The warrants were priced the same as the company's April 1 offering. After the deal, the company's stock dropped $0.25 to close at $3.

After this most recent deal closed, the company's stock lost $0.02 to close at $3.

"It's like a half-off sale on these warrants and I think it's really driving their stock down," said the market source.

"This additional financing, the second since April 1, bringing the total of private placements this month to $8 million, is a further vote of confidence in the new management at Recom, and the enormous domestic and international potential of our proprietary technology," said the company's chief operating officer Rodney Hildebrandt, in a statement.

"These substantial private placements also reflect the growing interest and confidence in our Model 100 Heart Monitor and its move towards commercial marketing, giving us great confidence for the company's immediate and future prospects.

Based in Los Angeles, Recom is a life science company focused on monitoring and detecting diseases through biomedical signal monitoring. The proceeds will be used to market the company's Model 100 Heart Monitor.

Chamaelo's stock continues to drop

The day after announcing that the greenshoe will be exercised on its C$305,022,500 private placement, Chamaelo Energy Inc.'s stock dropped again Tuesday.

The company's stock closed down C$0.10 at C$6.40 Tuesday after closing down C$0.09 at C$6.50 Monday when it was announced that the greenshoe would be exercised.

On Thursday, when the offering was first announced, the company's stock dipped C$0.12.

According to the terms of the Chamaelo deal, the company will issue series E subscription receipts at C$6.50 each and series D subscription receipts, convertible into debentures, at C$1,000 each. The debentures are convertible into common shares at C$5.75 each.

The greenshoe attached to the deal will be for up to 3,847,l00 additional series E receipts.

The proceeds from the offering will be used for Chamaelo's $375 million acquisition of oil and natural gas properties in West Central Alberta and Northeastern British Columbia.

Based in Calgary, Alta., Chamaelo is an oil and gas exploration company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.