Oil prices dive as Duvernay prices PIPE; Diametrics raises $28.5 million from preferreds

By Sheri Kasprzak

New York, Sept. 22 - Diametrics Medical, Inc. sealed a $28.5 million convertibles offering as oil prices dropped yet again, fueling talk among sellsiders that PIPE volume may benefit from the decline.

"We're loving this," quipped one market source when asked about the relation of oil prices to PIPE volume on Friday. "Stocks aren't exactly jumping on this, but we are a market that runs on news. News pushes stocks up or down, so just the news that oil was down more than a dollar today is going to do us some good in the coming week."

Oil prices dropped by $1.04 and ended the day at $60.55 per barrel.

"Finally we're back down to the levels where we can get things done; it's been consistently down and we're hoping that is good news for stocks," said another sellsider. "It's wait and see at this point."

Even so, oil companies in Canada are still pricing substantial offerings. The most recent was Friday's deal negotiated by Duvernay Oil Corp. Duvernay intends to raise C$48,125,000 in the deal, which includes 1.1 million flow-through shares.

One Vancouver, B.C.-based source said earlier this week that investors are likely looking at these oil offerings with a keener eye and may be looking more at individual companies and their stock instead of at the sector as a whole.

The shares are priced at C$43.75 each, a 28.2% premium to the company's C$34.11 closing stock price on Thursday.

The stock slipped by a penny on Friday to close at C$34.10 (Toronto: DDV).

The volume of Duvernay shares traded Friday climbed to 293,020 shares, compared with an average of 129,852 shares.

The deal is being placed through a syndicate of underwriters led by Peters & Co. Ltd.

The placement is scheduled to close Oct. 12.

Proceeds will be used for Canadian exploration expenses.

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

In secondary energy activity, Calgary, Alta.-based oil company Alberta Clipper Energy Inc.'s stock clipped on Friday after the company priced a C$25 million stock deal earlier in the week.

The stock lost 3 cents, or 0.5%, to end at C$6.03 (Toronto: ACN). The lost 20 cents, or 3.2%, to close at C$6.05 on Wednesday when the deal priced. On Thursday, the stock climbed by a penny.

In the placement, the company intends to sell shares at C$6.00 each, a slight discount to the company's C$6.25 closing stock price on Tuesday.

Diametrics' $28.5 million deal

In the alternative fuels space, Diametrics completed a $28.5 million private placement of series J convertible preferred stock as part of its acquisition of Vanguard Synfuels, LLC.

The 8% preferreds were sold to a group of institutional investors led by MAG Capital, LLC.

The preferreds are convertible into 37.5 million common shares at $0.76 each.

Diametrics acquired Vanguard, which owns an operates a 12 million gallon-per-year biodiesel production facility in Louisiana, for $17.7 million in cash and 4,300 shares of series K convertible preferred stock.

Connected to the placement, holders of the company's $750,000 in senior secured convertible notes converted their holdings into 1.6 million common shares.

"Yesterday's acquisition marks the first step in our long-term strategy to build and acquire biodiesel production facilities," said Diametric chief executive officer Bruce Comer in a statement. "We are excited about the prospects of biodiesel playing a larger role in the overall diesel market. In 2005, biodiesel represented on 75 million gallons of the 60 billion-gallon United States diesel market."

Comer did not return calls Friday for comment on the placement itself.

The stock remained unmoved on Friday at $6.00 (OTCBB: DMMC).

Los Angeles-based Diametrics had been a shell company before acquiring Vanguard. The company will now develop biodiesel fuels.

Verso's credit facility

Looking elsewhere, Verso Technologies, Inc. obtained a $14 million revolving credit facility from Laurus Master Fund, Ltd. and issued warrants along with the offering.

The three-year facility includes an $8 million tranche and a $6 million tranche, of which $4 million is available now and the rest when Verso generates EBITDA of more than $500,000 in one fiscal quarter.

The new facility replaces the company's current $10 million credit facility with Silicon Valley Bank.

The $8 million tranche of the facility bears interest at Prime rate plus 200 basis points with a 9% floor. The $6 million tranche bears interest at 15% annually.

The investor will receive warrants for 600,000 shares, exercisable at $0.01 each for five years, and warrants for 1,321,877 shares, exercisable at $0.91 each for five years.

The investor will also receive warrants for 660,939 shares, exercisable for five years at $0.91 each.

On Friday, the stock lost 3.97 cents, or 3.95%, to close the week at $0.899 (Nasdaq: VRSO).

J.P. Turner & Co., LLC was the placement agent for the offering.

Verso, based in Atlanta, is a communications company for carriers and service providers.

Simtek wraps stock deal

In other tech news, Simtek Corp. settled a private placement of stock with a group of institutional investors for $4,555,000 Friday.

Renn Capital, Crestview Capital Master LLC, Big Bend XXVII Investments LP, Straus Partners & Straus GEPT and SF Capital, as well as insiders of the company, bought 11,531,653 shares at $0.395 each.

The investors received warrants for 1,729,754 shares, or 15% of the issued shares, exercisable at $0.54 each.

Proceeds will be used for the purchase of silicon wafers to support revenue growth and for working capital.

"We are pleased with the vote of confidence we have been given from our largest shareholders by completing the financing quickly," said Brian Alleman, the company's chief financial officer, in a news release. "With our fabless business model, it generally takes between four and five months from when we start wafers until we collect cash from customers.

"Without this financing, we could probably have limited the growth of the company based on our available cash resources from operations and other sources. With this additional working capital, and based on our current growth and projected return to profitability in the third and fourth quarters, we do not foresee a need to raise additional working capital in the future."

Also at Simtek, the company announced its plans to conduct a reverse stock split in September or October.

The company's stock remained unchanged at $0.46 (OTCBB: SRAM).

Based in Colorado Springs, Colo., Simtek designs semiconductor memory products used in global positioning systems, robotics, copiers, printers and other electronics.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.