Private placement volume takes off ahead of holiday; KFx unveils $48 million deal

By Sheri Kasprzak

Atlanta, Nov. 22 - Issuers flooded the private placement market Monday ahead of the Thanksgiving holiday.

"Some key markets are pretty strong today but I think a lot of companies just want to get some deals out there before the holiday," said one sell-side source. "I do suspect after the holiday season wraps up, investors will probably close themselves off to this market."

"My feeling is this," said another sell-sider. "The market isn't exactly ideal for these deals but there is money out there. If a company needs quick capital and investors are willing to buy, they're not going to turn it down."

Volume in Canada was slightly off Monday, squelched by a drop in oil prices.

Oil dropped $0.25 to close at $48.64 a barrel Monday, but some resources markets, like gold, remained strong, according to some sell-siders.

"We didn't see a lot of oil companies in the market today but there were quite a few resource-type companies," said one Canadian sell-sider. "Resources like gold are doing pretty well."

Private placement action in the United States was led by a $48 million private placement from KFx, a Denver-based clean-energy conversion company.

The company sold 4 million shares of common stock at $12 in a deal that is scheduled to close Nov. 24.

The company, which converts coal into clean energy, plans to use the proceeds from the private placement to fund the accelerated development of facilities for the production of its K-Fuel clean coal product.

The company's stock closed up $0.78 at $13.35 Monday.

VaxGen raises $40 million

In a deal that some traders said was priced at a discount, VaxGen sold $40 million in a private placement of shares.

The offering included 3 million shares at $13.25 per share to institutional investors.

Punk, Ziegel & Co. and Trout Capital LLC were placement agents in the offering.

"At $13.25, it's priced at a discount," said one trader.

Throughout November, VaxGen's stock has traded between $11.60 and $17.45. On Friday, the company's stock closed at $15.50 and the company's stock ended up $0.50 at $16.05 Monday.

James Cunha, VaxGen's chief financial officer, did not return requests Monday for comments on the pricing of the deal.

Based in Brisbane, Calif., VaxGen is a biopharmaceutical company focused on developing, manufacturing and commercializing products to prevent human infectious diseases.

Integrated gets $36 million in notes

Integrated Electrical Services Inc. raised $36 million in senior convertible notes.

Amulet Ltd. and Marathon Global Convertible Master Fund Ltd. bought series A and B 6.5% senior convertible notes, which mature Nov. 1, 2014.

The notes are convertible into a total of 9.4 million common shares at an initial conversion price of $3.25 per share.

Integrated expects the private placement to close Nov. 24.

Based in Houston, Integrated is an electrical contracting and maintenance company. The company plans to use the proceeds from the private placement to prepay a portion of its senior secured credit facility. The company will also use the proceeds for general corporate purposes.

QuietTiger raises $5 million

Through an equity line of credit, QuietTiger Inc. received $5 million from Double U Master Fund LP.

QuietTiger may draw upon the equity line any time for two years and will offer up shares to Double U Master Fund at 93% of the current market price. There is a floor of $0.25 per share.

"This equity line will ensure that QuietTiger has the resources to meet its ongoing financial commitments to SunnComm relating to the terms of the exclusive marketing agreement for the MediaMax CD copy management suite of products," said QuietTiger's chief executive officer William Whitmore in a statement. "Access to capital resources for these transactions will expedite the negotiations and improve our position as we prepare for the future."

Based in Phoenix, QuietTiger provides security products for the music and entertainment industries and plans to use the equity line to expedite negotiations with entertainment companies for its MediaMax CD copy management product.

On Monday, the company's stock closed down $0.008 at $0.047.

RoomLinX's equity line

RoomLinX Inc. got a $5 million equity line of credit from Cornell Capital Partners LP.

The standby equity distribution agreement allows RoomLinX to draw upon the financing in $250,000 tranches over two years. RoomLinX issued 1.1 million common shares to Cornell in the deal, as well as $10,000 as a commitment fee.

Cornell will pay 98% of the lowest closing bid price on the over-the-counter bulletin board for five days following the notice date.

Newbridge Securities Corp. was placement agent in the deal.

Based in Hackensack, N.J., RoomLinX is a high-speed, wireless internet provider. The company plans to use the proceeds from the financing for debt repayment and working capital.

The company's stock closed at $0.145 Nov. 19, its last trade.

Tidelands raises $5 million

Tidelands Oil & Gas Corp. sold $5 million in convertible debentures.

The 7% debentures, which mature May 18, 2006, were sold to Mercator Momentum Fund LP, Mercator Momentum Fund III LP, Mercator Advisory Group LLC and Monarch Pointe Fund LP.

The debentures are convertible into common shares at a 15% discount to market price, subject to a $0.45 floor and a $0.76 ceiling.

Warrants were also issued in the financing for 6,578,948 shares, exercisable through Nov. 18, 2007, at a price between $0.80 and $0.87 per share.

Tidelands is based in San Antonio, Texas, and operates a natural gas pipeline and gas processing plant.

The company's stock closed down $0.07 at $0.73 Monday.

LifePoint gets $4 million

LifePoint Inc. sold $4 million in convertible preferred shares and warrants through a private placement.

The company sold 4,000 units of one series E convertible preferred share and one warrant at $1,000 per unit.

The preferreds are convertible into 5,000 common shares and pay a dividend of 5%.

The warrants in the deal are exercisable for 5,000 shares at $0.40 per share for five years.

Think Equity Partners LLC was placement agent in the deal.

"As part of the re-start of LifePoint over the past year, we have successfully expanded and revitalized our management team, refined the manufacturing process and initiated a highly targeted sales and marketing program to capitalize on the growing demand for our drug testing," said Linda Masterson, LifePoint's chief executive officer and president, in a statement. "Our international marketing initiatives, coupled with prospects in the drug court market in the U.S., position us favorably as we head into the new year. This financing will provide the working capital needed to support the next stage of our growth."

Based in Ontario, Calif., LifePoint is a non-invasive drug diagnostic technology company. The company will use the proceeds from the equity line for general working capital.

On Monday, the company's stock closed up $0.03 at $0.23.

eMerge's offering

eMerge Interactive Inc. said it is selling $4 million in a private placement of common shares.

The company plans to sell 2.5 million shares at $1.60 each and warrants for 875,000 shares at $2.

Investors will also have the right to buy an additional $2 million for up to 1.25 million shares at $1.60 per share.

Based in Sebastian, Fla., eMerge is an agriculture, food-service and healthcare technology company.

The company's stock closed down $0.19 at $1.90 Monday.

Bluebook amends deal

After a stock split, Bluebook International Holding Co. said has closed an amended private placement for $2.24 million.

The company sold 2,131,033 shares at $1.05 and warrants for 426,206 shares exercisable at $1.31 each for five years.

The private placement was originally announced Nov. 15, but was altered after a stock split on Nov. 17. The original $2.2 million deal consisted of 42.6 million shares at $0.0525 and warrants for 8.5 million shares at $0.0655.

Based in Lake Forest, Calif., Bluebook International is a data, software and services provider to insurance companies.

Bluebook's stock closed unchanged at $0.04 Monday.

Canadian deals

Heading up private placement action north of the border, Canadian Zinc Corp. raised C$9.8 million through a private placement.

The company will sell10.5 million units of one share and one half-share warrant at C$0.65 each. The offering also includes 3.5 million flow-through shares at C$0.85 each. The whole warrants allow for the purchase of an additional share at C$0.85 each for 18 months.

The deal will be offered through an underwriting syndicate lead by Maison Placements of Canada Inc., which has a greenshoe option for up to 1.5 million at C$0.65.

Canadian Zinc is a Toronto-based zinc exploration company. It plans to use the proceeds from the flow-through shares for exploration expenditures in 2005 at its Prairie Creek silver-zinc project in the Northwest Territories. The non flow-through shares will be used for ongoing permitting and the development of the Prairie Creek project, working capital and for acquisitions and new ventures.

Canadian Zinc's stock closed down C$0.01 at C$0.66 Monday.

Crew raises C$8.8 million

Elsewhere in Canadian private placements, Crew Energy Inc. said it sold C$8.8 million in shares in a private placement.

The company will issue 800,000 flow-through common shares at C$11 each.

The deal will be offered through a syndicate of underwriters led by Orion Securities Inc.

Calgary, Alta.-based Crew is an oil and natural gas exploration, development and production company. The company plans to use the funds from the financing for its capital spending program in Alberta and British Columbia.

The company's stock closed up C$0.05 at C$8.80 Monday.

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