Applied Spectrum constructs PIPE for up to $12 million linked to acquisition; Azco raises $1 million

By Sheri Kasprzak

New York, Sept. 7 - PIPE activity was led by an acquisition-related offering from Applied Spectrum Technologies, Inc. as stocks in the broader market took a dip on Thursday.

The company intends to raise up to $12 million and at least $10 million in an offering connected to its acquisition of Ever Leader Holdings Ltd.

The terms of the private placement have not been determined at this time, but completion of the proposed acquisition is contingent upon the completion of the placement, according to an 8-K the company filed with the Securities and Exchange Commission Thursday.

On Thursday, the company's stock remained unchanged at $0.46 (OTCBB: APSP).

Under the terms of the share exchange, Applied Spectrum will acquire all of the outstanding shares of Ever Leader and will issue, in turn, 62,942,360 shares of Applied Spectrum to Ever Leader's shareholders.

According to the company's latest earnings statement, Applied reported a net loss of $23,467 for the quarter ended June 30, compared with a net loss of $348 for the corresponding 2005 quarter.

Based in Vero Beach, Fla., Applied Spectrum is in the process of acquiring businesses. It presently has no operations.

In the broader market Thursday, stocks took a fall, knocking off private placement volume, at least temporarily, according to one sellsider.

"I don't see it as a trend," he said. "I think it's a temporary dip [in volume]. I do still think there is investor interest in these deals and I think in the next few months, we'll be seeing a lot more [offerings]."

The Dow Jones Industrial Average gave up 74.76 to close at 11,331.44; the Nasdaq composite index fell by 12.55 to end at 2,155.29; and the Standard & Poor's 500 composite index slipped by 6.24 to end at 1,294.02.

Azco's $1 million deal

Moving to the natural resources sector, dropping gold prices didn't stop Azco Mining Inc. from wrapping a $1 million private placement of senior secured convertible notes with five institutional investors.

Gold prices declined by $16.90 to end the session at $624.90 per ounce.

The 7% Azco notes are due Jan. 1, 2008 and are convertible into common shares at $1.00 each.

The investors received warrants for 500,000 shares, exercisable at $1.00 each for five years, and also received the right to buy another $500,000 in principal of the notes.

The conversion price is a 6.5% discount to the company's $1.07 closing stock price on Wednesday.

The offering, announced early Thursday, sent the stock down 5 cents, or 4.67%, to close at $1.02 (OTCBB: AZMN).

"It's really no wonder," said one sellsider familiar with the sector. "Gold, copper, lots of minerals are down."

Connected to the deal, the conversion price of the company's outstanding $2.5 million in convertible notes was dropped to $1.00 from $1.58.

Based in Glendale, Ariz., Azco is a gold, copper and industrial minerals exploration company.

Meanwhile, Goldbelt Resources Ltd., which priced a C$7.98 million PIPE earlier this week, saw its stock dip by 3 cents, or 2.54%, to end at C$1.15.

The Toronto-based gold explorer said it plans to sell shares at C$1.05 each.

On Tuesday, when the deal priced, the stock gained 2 cents, to end at C$1.19, and on Wednesday, the stock fell by a penny to end at C$1.18.

Aurora prices C$30 million PIPE

In Canada, Aurora Energy Resources Inc. led PIPE activity there, negotiating a C$30,000,435 private placement and a separate C$10 million offering to close concurrently with this deal.

In the first offering, the company intends to sell 1,722,500 non flow-through shares at C$10.45 each and 956,200 flow-through shares at C$12.55 each.

The non flow-through shares are priced at a 2.3% discount to the company's C$10.70 closing stock price on Sept. 6 and the flow-through shares are priced at 17.2% premium to the same closing stock price.

The deal is being placed through an underwriting syndicate led by Sprott Securities Inc.

In the offering set to close concurrently with this deal, the company plans to sell 956,938 non flow-through shares at C$10.45 each.

The two deals are slated to close Sept. 28.

Proceeds from the flow-through shares will be used for exploration on the company's Canadian properties. The rest will be used for exploration on the company's Michelin and Jacques Lake deposits, for additional exploration on the Central Mineral Belt of Labrador and for general corporate purposes.

The stock closed down 69 cents, or 6.45%, to end at C$10.01 (Toronto: AXU).

The volume of shares traded Thursday jumped, with 1,256,910 shares traded, compared to the average of 260,464 shares.

Aurora, based in Vancouver, B.C., is a uranium exploration company.

Sunrise stock edges up

Sunrise Senior Living Real Estate Investment Trust saw its stock rise slightly Thursday, a day after announcing the completion of a C$134 million PIPE.

The stock gained 3 cents, or 0.29%, to close at C$10.23 (Toronto: SZR). After the deal closed Wednesday, the stock fell by 10 cents, or 0.97%, to end the session at C$10.20.

The company sold subscription receipts at C$9.50 each and sold C$88 million in 7% unsecured subordinated convertible debentures.

The receipts are exchangeable on a one-for-one basis for trust units once the company completes its current acquisition of 80% interest in 24 assisted living facilities.

The debentures are due Dec. 30, 2011 and are convertible into trust units at C$10.50 each.

The receipts and debentures were issued through a syndicate of underwriters led by TD Securities Inc.

Toronto-based Sunrise is a real estate investment trust focused on acquiring and developing senior living facilities in Canada and the United States.

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