North American Scientific gears up to close $24 million PIPE; Branded Media raises $7 million in unit sale

By Sheri Kasprzak

New York, June 6 - Even as stocks continued to sink for the second-straight session, North American Scientific, Inc. announced its intention to settle a $23,969,271 private placement of stock later this week.

A group of investors led by Three Arch Partners agreed to buy 12,291,934 shares at $1.95 each and will receive warrants for 6,145,967 shares. The warrants in the deal are exercisable at $2.08 each.

The company had 16,988,869 shares outstanding as of Feb. 17.

News of the offering comes a day ahead of the release of North American's second-quarter earnings statement.

At the end of the day Tuesday, the company's stock climbed 7 cents, or 3.7%, to end at $1.96 (Nasdaq: NASI).

CIBC World Markets Corp. was the placement agent for the deal, which is slated to close Wednesday.

"This transaction will allow North American Scientific to maintain its operations while aggressively pursuing our breast brachytherapy product introduction," said L. Michael Cutrer, North American's chief executive officer, in a news release. "We expect that the proceeds from this offering will allow North American Scientific to regain compliance with Nasdaq listing requirements."

In early May, the Nasdaq Stock Market notified North American that it is not in compliance with Nasdaq's $10 million stockholders' equity requirement.

"We are pleased to join existing North American Scientific shareholders in supporting and building a successful company," said Wilf Jaeger, general partner of Three Arch, in a statement. "We believe their oncology products and their breast cancer treatment products in particular will have an important impact on what remains a challenging clinical problem."

Based in Chatsworth, Calif., North American Scientific manufactures products used in oncology.

In the broader market, stocks continued to slide with the Dow Jones Industrial Average losing 46.58 to end at 11,002.14 after dipping below 11,000 during the session - its lowest level in three months. The Nasdaq composite index gave up 6.84 to close at 2,162.78, and the Standard & Poor's 500 composite index fell 1.44 to end at 1,263.85.

Branded's $7 million deal

In other PIPE activity Tuesday, Branded Media Corp. pocketed $7 million from a private placement of units comprised of debentures and warrants.

Branded sold 112 units at $62,500 each. Each unit is comprised of $62,500 in principal of 8% secured convertible debentures and warrants for 250,000 shares. The debentures are initially convertible into 250,000 common shares at $0.25 each and are due Dec. 1, 2006. The warrants are exercisable at $0.50 each through June 1, 2011.

Of the proceeds raised in the offering, $3,375,000 was issued for cash and the remaining $3,625,000 was issued following conversions from existing debenture and preferred holders.

Westminster Securities Corp. was the placement agent.

"We are very pleased with the results of the offering as it demonstrates a strong vote of confidence by the investment community in our growth strategy," said Eve Kryzanowski, Branded's chief executive officer, in a news release from Tuesday morning. "The placement of this funding provides Branded Media with the capital to continue the development of our brands and the expansion of the business of our wholly owned subsidiary, Executive Media Network."

On Tuesday, the stock remained unchanged at $0.50 (Pink Sheets: BMCP).

New York-based Branded is a media company that manages and extends brands using multimedia platforms.

Aeolus wraps $5 million PIPE

Aeolus Pharmaceuticals, Inc. settled a $5 million stock offering of 10 million shares with two investors led by Efficacy Biotech Master Fund Ltd.

Efficacy and Ronin Capital, LLC bought the shares, which were priced at a 41.1% discount to the company's $0.85 closing stock price on Monday.

"That's a pretty harsh discount," said one market source familiar with the sector. "Looks like they had to settle. You have to do what you have to do to get the cash, I guess."

The two investors received warrants for 7 million shares, exercisable at $0.75 each.

Efficacy Capital came away from the deal with additional warrants for 4 million shares, exercisable at $0.50 each for one year.

At the end of the day, Aeolus' stock dropped 5 cents, or 5.88%, to end at $0.80 (OTCBB: AOLS).

The proceeds will be used for the clinical development of AEOL 10150 and for work necessary to file Investigational New Drug applications for at least one of its compounds. The rest will be used for working capital and general corporate purposes.

"This financing provides the capital necessary for the company to move forward with our lead compound, AEOL 10150, into phase 2 and to complete the preclinical studies in order to file INDs for least one of our pipeline compounds," said Richard Burgoon, the company's chief executive officer, in a statement.

"We have successfully reduced our overhead expenses so that a significant portion of this capital will be focused on the development of our catalytic antioxidant technology."

San Diego-based Aeolus develops therapeutic antioxidants with a broad range of uses.

Discovery Air prices C$25 million offering

In Canada, Discovery Air Inc. negotiated a C$25 million private placement as part of its acquisition of Great Slave Helicopters Ltd.

Discovery Air plans to sell 16,129,032 units at C$1.55 each.

The units consist of one class A share and one half-share warrant. Each whole warrant allows for the purchase of another class A share at C$1.75 each for 18 months.

The proceeds will be used for the Great Slave Helicopter acquisition and for working capital.

The offering is scheduled to close June 19.

On Tuesday, the stock fell 4.21%, or 9 cents, to end at C$2.05 (TSX Venture: DA).

Under the terms of the acquisition, Discovery will buy the outstanding shares of Great Slave Helicopter for C$20 million in cash and 40 million class A shares.

Great Slave Helicopter provides helicopter services to resources and mineral companies.

London, Ont.-based Discovery Air provides air services to the natural resources sector, including forest management and mineral companies.

In other Canadian offerings, Groundstar Resources Ltd. priced a C$7 million private placement.

The offering includes 5,833,333 units at C$1.20 each. Each unit is comprised of one share and one half-share warrant. The whole warrants are exercisable at C$2.00 each for 18 months.

Placement agent Blackmont Capital Inc. has a greenshoe for up to 875,000 additional units.

The company's stock fell 3.33%, or 5 cents, to end the day at C$1.45 (TSX Venture: GSA).

Proceeds will be used for exploration and drilling in Egypt. The rest will be used for working capital and general corporate purposes.

Groundstar closed a similar offering of 5,750,333 units at C$0.60 each, including a fully exercised greenshoe, for C$3,450,200.

Calgary, Alta.-based Groundstar is an oil and natural gas exploration company.

Canyon Resources stock slips

A day after completing a $5.1 million PIPE, Canyon Resources Corp.'s stock dipped on Tuesday.

The stock fell 5.41%, or 6 cents, to end the session at $1.05 (Amex: CAU).

On Monday, when the deal closed, the stock lost 11.9%, or 15 cents, to close at $1.11.

In the placement, the company sold shares at $1.00 apiece, a 15% discount to the 20-day volume weighted average price from May 2 to May 30.

Kuhns Brothers, Inc. was the placement agent.

Golden, Colo.-based Canyon is a gold exploration company.

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