Coda secures $12 million from convertibles; RegeneRx sells to existing investors; Atlas to raise C$3 million

By Kenneth Lim

Boston, Feb. 27 - Coda Octopus Group Inc. said a $12 million private placement of seven-year convertible notes will help fund the company's growth through its core sonar technology.

Meanwhile, RegeneRx Biopharmaceuticals Inc. said it is selling $5 million of shares and warrants to two investors who are familiar with the company.

Coda Octopus 'thrilled' with sale

Coda Octopus is pleased with the pricing on a $12 million private placement of seven-year convertible senior secured notes due 2015, an external spokesman for the company said.

"I think what you would say about this, it really propels the company into the next stage of development," spokesman Ira Weingarten said. "It provides the company with the permanent financing that it needs to move the company to the next level."

New York-based Coda Octopus, which develops three-dimensional sonar systems that are used for port security, among other purposes, said it sold the notes to the Royal Bank of Scotland plc.

Royal Bank of Scotland is acting as an agent and is expected to on-sell the convertibles to certain investors, Coda Octopus chief financial officer Jody Frank told Prospect News. Greenhouse Investments Ltd. was the transaction arranger and adviser to Coda Octopus.

"They are really excited to be able to do this deal," Weingarten said. "They are very, very happy with the job that Greenhouse has done."

The notes will pay a maximum interest rate of 8.5% and will be redeemed at 130% of the principal at maturity. They are convertible into Coda Octopus common stock at $1.05 per share. The company may force conversion if its common stock price hits triggers that begin at $2.50 and step up to $3.50 during the life of the notes.

The initial conversion price represents an initial conversion premium of 40% based on Coda Octopus' Feb. 22 closing price of $0.75. Coda Octopus stock (OTCBB: CDOCE) closed at $0.80 on Wednesday, up by $0.05, or 6.67%.

The company decided to raise capital through convertibles because it was the best option under current market conditions, Weingarten said.

"The stock is now currently at 83 cents in what has been a challenging market for micro-caps, and $1.05 is significantly different from 83 cents," he said. "They are thrilled about the transaction, especially in this kind of market environment. A convertible is very attractive and offers higher valuation at this time."

RegeneRx receives $5 million boost

RegeneRx said it has agreed to sell $5 million of shares and warrants to existing investors of the company and will use the money to advance its ongoing clinical trials.

"The financing is for operating capital for our ongoing clinical trials programs," RegeneRx president and chief executive J.J. Finkelstein said. "It's very important for us. We're a small company and of course we rely on capital for operating purposes, and sponsorship of clinical trials can be expensive."

Based in Bethesda, Md., RegeneRx is a biopharmaceutical company focused on the treatment of acute and chronic wounds. RegeneRx currently has three products in five clinical trials: a drug designed to treat skin wounds, a drug for ophthalmic would healing and a third wound-healing drug for heart attack patients, Finkelstein said.

The company said it will sell 5 million common shares at $1.00 per share as well as issue three-year warrants for 1 million common shares to the investors. The warrants have a strike price at $1.60 per share. RegeneRx stock (Amex: RGN) closed at $1.02 on Wednesday, up by $0.02, or 2%, following the announcement of the deal.

The company has an option to buy back the shares at any time until Dec. 31, 2009 for $2.00 per share or at any time between Jan. 1, 2010 and Dec. 31, 2010 for $2.50 per share. The repurchase right ends after 2010.

"Here's the theory: The theory is that our stock price, as is the case for many in our industry, is low right now," Finkelstein said. "So raising capital at these prices is painful for these companies. What we want to do is attract capital, but in the event that we meet our clinical targets and our product goals, if the stock value increases substantially we would like to buy those shares back - at a premium for the investors and a discount to the current value. Both sides win in this case."

He said the company ruled out raising capital through debt.

"We really weren't interested at debt at this time," he said. "It can make your balance sheet pretty complicated. At this time, of all of our options, this was by far the best and least dilutive option for the company."

The shares and warrants in the deal were taken by two individual investors who are familiar with the company, Finkelstein said.

"The investors in this particular deal are two principals of the company," he said. "They are two individual investors who have in the past invested with the company, so they know our company, they know our program, they know as much about us as we know about ourselves."

Atlas to raise C$3 million

Atlas Minerals Inc. hopes to sell up to C$3 million of stock-and-warrant units in a private placement.

The 4,285,714 units will be sold at C$0.70 apiece. Each unit will comprise one common share and one half-share warrant that has a strike price of C$1.00 per share and an expiry date of October 2009.

Atlas Minerals common stock (TSX: AMR) rose C$0.06 on Wednesday to close at C$0.87.

The company said it has engaged Canaccord Capital Corp. as agent to sell the units on a best-efforts basis.

Vancouver, B.C.-based Atlas is a capital pool company that focuses on metal mining. It said the proceeds of the deal will be used for exploration at its Tres Chorreras property in Ecuador and for general working capital. The Tres Chorreras property is Atlas' most advanced project.

"These additional funds will allow us to expand our current drilling program on the 3C breccia zone, which recently not only confirmed has the presence of a significant body of mineralization but has demonstrated a large increase in vertical extent, and to fully evaluate the epithermal zone," company president Barry Herring said in a press release.

Medoro plans C$10 million sale

Canada's Medoro Resources Ltd. announced a C$10 million private placement of units.

The company plans to sell 25 million units of one common share and one half-share warrant at C$0.40 apiece. Each whole two-year warrant will be exercisable at C$0.60. Medoro common stock (TSX: MRS) closed unchanged on Wednesday at C$0.425.

Proceeds will be used for exploration and drilling in Venezuela and Mali, as well as for other general and corporate purposes.

Toronto-based Medoro is a gold exploration and development company.

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