Big Sky finishes $42 million deal under amended terms; oil prices continue to impact PIPEs

By Sheri Kasprzak

New York, Aug. 29 - Big Sky Energy Corp. led private placement news Monday as it completed a $42 million deal that has been in the works since July.

The Calgary, Alta.-based oil explorer changed the terms of the deal before it closed, selling units of subscription receipts and shares to U.S.-based investors and special warrants to Canadian investors in lieu of the originally announced common shares.

As of press time Monday, Matthew Heysel, Big Sky's chairman, had not returned requests for comment on why the company changed the terms of the deal.

All told, Big Sky issued 30,975,000 units at $1.00 each to its U.S. investors and 11,025,000 special warrants at $1.00 each to the Canadian subscribers. The offering was first announced July 18 as a $25 million deal comprised of 25 million shares at $1.00 each. The deal was upsized on July 29 to $42 million but at that point only included shares.

The units include one half of a subscription receipt and one half of a common share. The whole receipts are exchangeable for a common share once Big Sky gets the OK from the Ministry of Energy and Mineral Resources of Kazakhstan - the location of most of its oil exploration operations. The special warrants are also exchangeable for common shares upon the same terms.

The company reportedly had 97,963,400 outstanding common shares as of Aug. 15.

Westwind Partners Inc. was the placement agent for the transaction.

Proceeds will be used for development in the pre-Caspian basin of Kazakhstan, for expansion into the wider Caspian region and for general corporate purposes. The company may also use some of the proceeds to acquire adjacent properties.

For the quarter ended July 30, Big Sky reported net losses of $2,852,054 compared to net losses of $937,355 in the year-ago period.

On Monday, Big Sky's stock slipped $0.03 to close at $1.26.

Moving to the broader private placement market, sell-siders said Monday that a surge in oil has renewed fears that stocks may sink later this week.

"Whatever you see this week will be very sparse, I'll put it that way," said one market source. "We're going to see a major slowdown in the coming days."

As for how long that slowdown will last, the sell-sider said he feels oil may settle down near the latter part of the week once tumult over Hurricane Katrina subsides.

"Stocks will go down," said another market source when asked why stocks remained relatively unimpressed by an early jump in oil.

Oil prices surged to more than $70 per barrel early Monday before settling up $1.07 to $67.20 per barrel.

The Dow Jones Industrial Average shrugged off the gains, closing up 65.76 at 10,463.05. The Nasdaq composite index gained 16.88 to close at 2,137.65, and the Standard & Poor's 500 composite index rose 7.18 to end at 1,212.28.

"Barring anything too unusual, stocks will probably go down tomorrow on this [oil] and that hurricane," bargained one sellside source. "Issuers know that or at least fear that and so they'll probably stay out."

Not so in the Canadian oil and natural gas sector, said one source north of the border who watches natural resources.

"I don't know how much," he noted of the impact the jump in oil on issuance among oil and natural gas exploration companies. "There will probably be some. Minerals will follow. It's all connected."

Exchange Industrial leads Canadians

Sparse Canadian offerings were led Monday by a C$7.5 million offering priced by Exchange Industrial Income Fund. The company also arranged a separate non-brokered deal Monday.

The fund plans to sell up to 416,667 trust units at C$12.00 each and C$2.5 million in convertible debentures.

The five-year debentures bear interest at 8% annually and are convertible into trust units at C$3.25 each.

Wellington West Capital Inc. is the placement agent.

Exchange Industrial plans to use the proceeds from the brokered offering to buy 398496 Alberta Inc., currently operating as Jasper Tank. The rest will be used for working capital.

The non-brokered deal Exchange announced Monday includes 95,238 trust units at C$10.50 each for proceeds of C$1 million.

Both offerings are expected to close Sept. 1.

The deals were announced late Friday, and the company's stock closed down C$0.58 on Monday to end at C$12.00.

Based in Winnipeg, Man., Exchange Industrial is an open-ended investment trust.

American Manor to raise up to C$5 million

Looking elsewhere in Canada, Halifax, N.S.-based American Manor Enterprises Inc. announced its plans Monday to raise between C$1 million and C$5 million in a private placement to fund its transition to a real estate firm from an oil and natural gas exploration company.

The company plans to sell up to 8,333,333 shares and at least 1,666,667 shares at C$0.60 each.

Acadian Securities Inc. is the placement agent for the deal, which is expected to close Oct. 11.

Some of the proceeds will be used for real estate acquisitions.

On Monday, American Manor's stock remained unchanged at C$0.52. The company's stock is currently under a trading halt while it undergoes its change of business.

Vista Gold's stock closes up

Vista Gold Corp. saw its stock make slight gains on Monday.

The company's stock gained $0.02 to close at $3.57.

Even though the company's $7,776,000 private placement offering announced on Friday helped move Vista's stock on Monday, one sell-sider familiar with resources said gold prices in general have been higher.

"It certainly does make a difference," the source said of the deal, in which Vista plans to sell units at $3.60 each. "Gold is up, which also just means it's a good time to be a gold company conducting a PIPE."

On Friday when the deal was first announced, Vista's stock slipped $0.03 to close at $3.55.

Littleton, Colo.-based Vista is a gold exploration company.

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