Oil, stocks cause private placement volume to sag; Critical Path closes $18 million deal

By Sheri Kasprzak

Atlanta, Jan. 3 - New private placement offerings in both the United States and Canada were scarce Monday as oil prices dropped and stocks took a dive.

Despite the low volume, several deals that priced in December and November closed.

"We're seeing very little in the way of new deals today," said one sell-side source. "Most of what we are seeing are smaller deals. There's really not much out there over $1 million."

"Volume is kind of low today," said another sell-sider. "I imagine as the week progresses, as people get back into the swing of the week, we'll see more new deals."

The Dow Jones Industrial Average closed down 53.58 Monday at 10,729,43, the Nasdaq composite was down 23.29 to close at 2,152.15 and the S&P 500 closed down 9.84 to end at 1,202.08.

In Canada, volume was sluggish because of tumbling oil prices. Oil fell $0.81 to $42.64 per barrel on Monday.

"There's really not much to report today," said one Canadian sell-sider. "Oil is down, so volume is down."

Heading up private placement action in the United States was the closing of an $11 million private placement from Critical Path Inc.

The company sold an unsecured promissory note for $11 million. A second note for $7 million will be issued in March.

The note accrues interest at 13.9% annually and matures Dec. 30, 2007.

Warrants for 385,710 shares of series F redeemable convertible preferreds will also be issued in the deal. The preferreds are convertible into common shares at $1.40 each and accrue dividends at 5¾% annually.

"It looks like a pretty good deal for them," said one market source. "The tech sector is doing well in general and this looks like it's priced fairly."

San Francisco-based Critical Path provides e-mail hosting to internet service providers. The proceeds from the offering will be used for working capital.

On Monday, Critical Path's stock closed unchanged at $1.47.

World Health wraps deal

World Health Alternatives Inc. announced it raised $13 million in a private placement of series A convertible preferreds.

The preferreds pay a dividend of 8% per year and are convertible into a number of shares equal to the stated value of the share divided by $3.

Investors will also receive warrants equal to 25% of the individual investor's subscription amount divided by $3.

Based in Pittsburgh, World Health Alternatives provides staffing services for the medical industry. The company plans to use the proceeds from the offering to satisfy the outstanding obligation underlying debentures arising from the financial arrangement entered into on Oct. 22, 2004.

The company's stock closed down $0.10 at $3.99 Monday.

Calnet raises $10.92 million

Calnet Business Bank NA said Monday it raised $10.92 million in a private placement.

The company sold 780,000 shares at $14 each.

"We are very pleased with the success of the private placement offering which was oversubscribed," said Calnet's president and chief executive officer Peter J. Raffetto. "The additional capital allow us to grow the bank and give us an immediate increase in our lending limits to expand our customer base and further service our existing customers."

Sacramento, Calif.-based Calnet is a bank holding company.

The company's stock closed unchanged at $20 on Dec. 31, its last trade.

Nyfix's $7.5 million offering

Nyfix Inc. closed a $7.5 million private placement of a subordinate convertible note.

The note, which bears interest at 5% annually and matures Dec. 30, 2009, is convertible into common shares at $6.94 each.

"Nyfix is a good one," said a market source. "It's another tech company. The conversion price is at a premium, so of course that's good for the company. For tech stocks, especially these days, it's really not so rare [to have deals priced at a premium]."

The conversion price is a 20% premium to the average closing price for five trading days before Dec. 30, 2004. The closing stock price on Dec. 30 was $5.96.

Based in Stamford, Conn., Nyfix provides workstations for domestic and international financial markets. The company plans to use the proceeds from the deal for working capital and general corporate purposes.

Nyfix's stock closed down $0.17 at $6.02.

Appliance Recycling closes $3.45 million deal

Appliance Recycling Centers of America Inc. sold 1.15 million shares at $3 each in a private placement.

In total, the company received $3.45 million in gross proceeds from the offering.

Lantern Investments Inc. was the manager of the deal.

"The capital raised through this private placement will greatly facilitate the continued expansion of our ApplianceSmart operation," said the company's president and chief executive officer Edward Cameron, in a statement. "We have made significant progress over the past year at building and strengthening our retail business. Backed by the proceeds from the this transaction, we are optimistic about the prospects of our ApplianceSmart operation in 2005."

Based in Minneapolis, Appliance Recycling buys and re-sales damaged and discontinued appliances from major manufacturers.

Proceeds from the deal will be used to support the opening of additional ApplianceSmart factory outlets. The remainder of the funds will be used for general corporate purposes.

On Monday, the company's stock closed unchanged at $4.60 Dec. 31, its last trade.

Media Services finishes $3.25 million deal

Media Services Group Inc. raised $3.25 million in a private placement of series F convertible preferreds.

The company sold 10,156 preferreds at $320 each.

The preferreds are convertible into common shares at $13 each.

Investors in the upsized offering also received warrants for 115,385 common shares at $16.25.

The deal was originally announced as a $3 million offering.

"We begin 2005 with nearly $5 million on our balance sheet and no debt," said Jeremy Barbera, Media Services Group's chairman and chief executive officer, in a statement.

Based in New York, Media Services Group is a company focused on the homeland security, public safety and surveillance industries.

The company's stock plummeted $0.95 to close at $12.80 on Monday.

Swiss Medica gets equity line

Swiss Medica Inc. received a $3 million standby equity distribution agreement.

On Dec. 23, the company entered into the agreement with Cornell Capital Partners LP whereby Swiss Medica may, at its discretion, sell shares to Cornell for up to $3 million.

Cornell will pay 98% of the lowest volume weighted average price of the company's stock, as quoted on the over-the-counter bulletin board, for five trading days following the notice date.

There is a $75,000 per week limit on each advance.

Sloan Securities Corp. was the placement agent in the transaction.

Based in Toronto, Swiss Medica acquires and commercializes bioscience products.

On Monday, Swiss Medica's stock closed up $0.005 at $0.395.

IDI wraps offering

IDI Global Inc. sold 3,428,570 shares at $0.70 each for proceeds of $2,399,999 in a private placement.

The investor in the deal, SBI Brightline X LLC will buy the shares in 18 tranches of 200,000 shares each.

Brightline also received a warrant for 571,429 shares at $0.70 for four years.

IDI, based in Orem, Utah, provides Web site builders for small businesses and universities.

The company's stock closed unchanged at $0.499 on Monday.

Sagemark raises $2.36 million

The Sagemark Cos. Ltd. wrapped up a private placement for $2.36 million.

The company issued 1.18 million shares at $2 each and issued five-year warrants for 590,000 shares at $4 each.

Joseph Stevens & Co. Inc is the placement agent in the offering.

"This private placement will enable the company to aggressively expand its portfolio of state-of-the-art PET imaging centers," said Sagemark's president and chief executive officer Ted Shapiro in a statement.

Based in New York, Sagemark acquires, organizes and operates outpatient diagnostic imaging centers. The company plans to use the proceeds from the offering to add to its portfolio of positron emission tomography imaging centers.

Sagemark's stock closed unchanged at $3 on Nov. 26, its last trade.

Systems Evolution's $1.5 million deal

Systems Evolution Inc. closed a private placement of secured convertible notes for $1.5 million.

The notes, which mature Dec. 31, 2006, bear interest at 8% per year and are convertible into common shares at the lesser of $0.13 or 50% of the lowest three trading prices during the 20-day period ending one day before the conversion notice.

The investors in the offering also received warrants for 4.5 million shares at $0.08 each for five years.

"We have the major building blocks in place and with this additional funding, we can round out our technology offerings and geographic presence," said Systems Evolution's president Richard Hartmann, in a statement. "Our strategy for this phase of growth will focus on adding strategic resources to our vertical business approach and filling out specific technology offerings."

Based in Houston, Systems is an internet technology consultancy company.

On Monday, the company's stock closed up $0.01 at $0.09.

Sinovac's $1.475 million offering

Sinovac Biotech Ltd. received agreements Monday for a $1.475 million private placement.

The company plans to sell 491,667 units at $3 each. The units are comprised of one share and one warrant.

The warrants in the deal allow for an additional share at $3.35 each for the first year and $4 in the second year.

Sinovac, based in Beijing, focuses on the research, development, commercialization and sales of human vaccines for infectious illnesses like hepatitis A and hepatitis B, influenza, SARS and avian flu. The proceeds from the offering will be used for the acquisition of an additional 20.56% of Sinovac Biotech Co. Ltd., the company's subsidiary, and for working capital.

Sinovac's stock closed down $0.01 at $3.57 on Monday.

RegeneRx wraps deal

RegeneRx Biopharmaceuticals Inc. closed the first tranche of a private placement for $1.25 million.

The company sold 384,615 shares at $3.25 each.

The investors also received warrants to buy additional shares totaling up to 25% of the shares issued in the financing. Each warrant allows for an additional share at $4.06 each for 36 months.

The entire offering is for $5.86 million.

"We are pleased that we continue to attract both new and existing investors confident in our technology and business model," said J.J. Finkelstein, the company's president and chief executive officer, in a statement. "This transaction is significant in that it will allow us to fully implement our operating strategy over the next 18 months, an important period in the clinical development of our technology platform."

Think Equity Partners LLC was the placement agent in the deal.

Based in Bethesda, Md., RegeneRx is a biopharmaceutical company focused on the treatment of acute and chronic wounds. It plans to use the proceeds from the offering for phase II wound-healing clinical trials, research and development and general operating purposes.

RegeneRx's stock closed up $0.30 at $4.35 on Monday.

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