CinTel pockets $15 million from convertibles; Protox, Allon negotiate PIPE offerings

By Sheri Kasprzak

New York, Oct. 25 - CinTel Corp. saw its stock advance on Wednesday after announcing the completion of a $15 million convertible bond offering earlier this week.

The stock gained 5.26%, or a penny, to settle at $0.20 (OTCBB: CNCN). The penny replaces the penny the stock gave up on Tuesday when the deal closed.

CinTel's vice president of business development, J.D. Sparks, said in an interview Wednesday that the zero-coupon bonds are due Oct. 30, 2011 and are convertible into common shares at $0.50 each. The conversion price is a 150% premium to the company's $0.20 closing stock price on Monday.

As previously reported, the investors in the offering included KTB China Optimum Fund, EMLSI, Axlon Corp. and STS Semiconductor & Telecommunications Co., Ltd.

"With respect to the choice of financing, it was determined by the company's board of directors," said Sparks in the interview. "This was done in part because our investors have a strong desire to remain in the company and support our future plans. They wanted the stock in order to show their long-term support."

Proceeds will be used for strategic acquisitions.

CinTel has tapped the PIPE market before, selling $5,561,857 of convertible notes in December 2005 and $2,161,334 of convertible notes in November 2005. Both notes are zero coupon and mature in 2007. The notes issued in December are convertible into common shares at $0.35 each and the November notes at $0.14 each. The conversion price of the December notes were priced on par with the company's closing stock price on Dec. 20, 2005. The conversion price of the November notes were priced at a 16.6% discount to the company's $0.12 closing stock price on Nov. 21, 2005.

CinTel, based in Louisville, Ky., develops technologies used to improve internet and network traffic. The company's operations are mostly based in Korea.

Protox, Allon offerings

Moving to the Canadian biotechnology sector, two offerings were negotiated led by a C$10 million deal from Protox Therapeutics Inc.

One market source based in Toronto said he feels the offerings may have more to do with the companies themselves than the direction of Canadian drug stocks.

"I don't think it has as much to do with the broader [biotech] market than it does with the individual issuers," he said. "Those [companies] clearly have a particular need for cash at this time and so priced their deals. It is a good time to price just because [Canadian] stocks have been performing quite well."

Protox plans to sell up to 20 million and at least 16 million units at C$0.50 each.

The units include one share and one half-share warrant with each whole warrant exercisable at C$0.65 for two years.

The company's stock gave up a penny on Wednesday to close at C$0.51 (TSX Venture: PRX).

Jennings Capital Inc. and Canaccord Capital Corp. are the agents.

Proceeds will be used for clinical activities on the company's PRX321compound for brain cancer and PRX302 compound for localized prostate cancer, as well as for research and development and general corporate purposes.

Vancouver, B.C.-based Protox develops therapeutic treatments for cancer and other diseases.

Allon to raise C$8 million

Another Canadian biotech company, Allon Therapeutics Inc., announced plans to raise up to C$8 million and at least C$4 million in an offering of units.

The deal includes up to 10 million and at least 5 million units of one share and one half-share warrant. Each whole warrant is exercisable at C$1.00 for two years.

Neuro Discovery LP is expected to participate in the placement to maintain its 20% interest in Allon.

Allon's stock remained unmoved on Wednesday at C$0.82 (Toronto: NPC).

Proceeds will be used to generate results from the company's ongoing phase 2 trial in mild cognitive impairment after coronary artery bypass graft surgery and the phase 2 trial in an Alzheimer's related condition that is expected to begin before the end of 2006. The remainder will be used for general corporate purposes.

The deal, set to close Nov. 14, is being placed through a syndicate of agents led by Blackmont Capital Inc. and Clarus Securities Inc.

Vancouver, B.C.-based Allon develops drugs that protect against neurodegenerative diseases like Alzheimer's disease, stroke, traumatic brain injury, multiple sclerosis and neuropathy.

Linn Energy stock climbs

As oil prices continued to climb for the second straight session, Linn Energy, LLC saw its stock climb slightly after announcing a $305 million trust unit offering.

The stock gained 2.39%, or 55 cents, to end the day at $23.54 (Nasdaq: LINE). On Tuesday, when the deal settled, the stock climbed by 19 cents to close at $22.99.

The volume of Linn shares remained elevated on Wednesday with 199,142 shares traded compared with the average 90,101 shares.

In the broader oil market, oil prices jumped by $2.05 to settle at $61.40 per barrel. On Tuesday, oil prices advanced by 54 cents to close at $59.35 per barrel.

In Linn's placement the company issued class A trust units at $21.00 each and class B units at $20.55 each. The A units were sold at a 7.9% discount to the company's $22.80 closing stock price on Monday and the B units at a 9.9% discount to the same closing stock price.

Linn Energy, based in Pittsburgh, is an oil and natural gas development and acquisition company.

Mart stock dips

Another oil company saw it stock drop by 10% on Wednesday after pricing a convertible note deal for C$17.75 million.

Mart Resources, Inc. plans to raise C$8,875,000 in secured notes and the same amount in unsecured notes.

On Wednesday, the stock dropped by 6 cents to settle at C$0.54 (TSX Venture: MMT). The deal priced Tuesday, and the stock remained unchanged at C$0.60.

The two-year notes both bear interest at 8% annually and are convertible into units at C$0.75 each.

The unsecured notes are convertible into units of one share and one warrant and the secured notes are convertible into units of one share and one half-share warrant.

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

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