Underground Solutions settles $18.8 million PIPE; TriStar Oil prices C$44 million deal as part of merger

By Sheri Kasprzak

New York, Jan. 19 - Underground Solution, Inc. led PIPE news Thursday, wrapping an $18.8 million stock offering with three institutions. Meanwhile in Canada, TriStar Oil & Gas Ltd. announced the terms of a C$44.02 million private placement as part of its merger plans with Sawtooth International Resources Inc.

In the Underground Solutions offering, the company issued 235 million shares at $0.08 apiece to Wynnefield Partners Small Capital Value LP I; The Water Fund LP; and DHW Water Partners.

After the closing was announced Thursday afternoon, Underground Solutions' stock jumped 11.67%, or 7 cents, to end the day $0.67 (Pink Sheets: UGSI).

Proceeds will be used for debt retirement, capital equipment, research and development and general corporate purposes.

"The proceeds of this offering will provide us with the capital we need to develop a national sales presence and to make the investments in equipment and inventory required to achieve the aggressive growth targets that we have established for ourselves," said Andy Seidel, the company's chief executive officer, in a statement.

"We are grateful for the vote of confidence evidenced by this significant new investment in our company," said Mark Smith, Underground Solutions' chairman, in a statement. "We note that the $19 million of new money invested in the company came from a combination of existing shareholders and new investors, all of whom clearly see the long-term value inherent in our proprietary technologies."

Also on Thursday, Underground Solutions said it raised $2.2 million in December and January through the issuance of series B convertible notes. The notes were converted into series B convertible preferreds. The preferreds are convertible on a one-for-one basis for common shares.

Based in Poway, Calif., Underground Solutions develops underground infrastructure and pipeline rehabilitation methods.

TriStar to raise C$44.02 million

Looking to Canadian offerings, TriStar Oil & Gas negotiated a C$44.02 million offering of subscription receipts linked to its merger with Sawtooth International.

Under the terms of the offering, TriStar will sell 5.68 million receipts at C$7.75 each.

The deal is being placed through a syndicate of underwriters led by Orion Securities Inc. and FirstEnergy Capital Corp.

The subscription receipts will be exchanged on a one-for-one basis for common shares of TriStar once the merger is completed.

The private placement is slated to close on Feb. 17.

The deal was announced Thursday afternoon, and TriStar's stock gained 6.4%, or C$0.51, to close the day at C$8.49 (Toronto: TOG).

Of the offering, one Canadian sellside source familiar with the deal said, "TriStar - deal is done. Management team has a great record, so [it's] no surprise."

Under the merger terms, TriStar will buy all of the outstanding shares of Sawtooth at C$2.25 each in cash or 0.2903 shares of TriStar for every share of Sawtooth.

A total of 3.6 million shares of TriStar will be issued to shareholders of Sawtooth.

"We are very excited about the opportunity to combine the Sawtooth assets with TriStar and continue our growth under their experienced management team," said Gary Waters, Sawtooth's president, in a statement. "The combination of our companies creates a diversified, quality production base with numerous opportunities. The combined cash flows will help to accelerate the growth prospects for the benefit of the shareholders of both companies."

Based in Calgary, Alta., TriStar is an oil and natural gas exploration company.

In the broader PIPE market in Canada, one sellsider there said that volume has been off so far this year - but it's still early.

"I would say if anything it has been a little lighter than expected but we did a lot last year and it is early in the year," he said. "I would expect that if oil and metals stay strong we will see lots of business."

In fact, on Thursday, oil prices continued to climb, gaining $1.10 to close at $66.83 per barrel.

MDN's C$5.06 million offering

Elsewhere in Canada, MDN Northern Mining Explorations Ltd. priced a C$5,062,500 private placement of units.

The company intends to sell up to 6.75 million units at C$0.75 each. The units are comprised of one share and one half-share warrant. The whole warrants are exercisable at C$1.00 each through Jan. 14, 2009.

A syndicate of agents led by Haywood Securities Inc. has a greenshoe for up to 2,716,667 units.

The deal is scheduled to close on Feb. 14.

Proceeds will be used for exploration and development on the company's projects in Tanzania and in Eritrea. The rest will be used for working capital and general corporate purposes.

On Thursday, the company's stock slipped 5 cents, or 6.67%, to end at C$0.70 (Toronto: MDN).

Based in Montreal, MDN is a gold exploration company.

Jefferies stock up 2.4% after PIPE

A day after announcing a $125 million private placement of convertible preferreds and a surge in earnings, Jefferies Group, Inc.'s stock ended the day up Thursday. The company's stock gained 2.38%, or $1.22, to finish at $52.52 Thursday (NYSE: JEF).

On Wednesday, when the deal was announced and Jefferies reported earnings rose 32% to $46.7 million in the fourth quarter, the company's stock gained 7.83%.

Massachusetts Mutual Life Insurance Co. agreed to buy series A convertible preferred stock. The preferreds are convertible into common shares at $62.00 each.

The two companies have also entered into an agreement to double their equity commitments to Jefferies Babson Finance LLC, the joint-venture company the two formed in October 2004. Jefferies and MassMutual will each invest $125 million into Jefferies Babson.

Jefferies also announced on Wednesday that its forth-quarter profit rose by more than 32%.

New York-based Jefferies Group is an investment bank.

Crystallex stock jumps 11.7%

Crystallex International Corp.'s stock took off on Thursday after the company priced a $31,317,100 private placement of units on Wednesday.

The stock gained 11.72% Thursday, or 30 cents, to end at $3.16 (AMEX: KRY).

The company's stock gained 6.06% on Wednesday when the offering was announced.

The non-brokered deal includes units priced at $2.90 each. Those units are comprised of one share and one warrant for 1.512 shares.

Crystallex, based in Toronto, is a gold exploration company.

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