INX taps strong stock price; Argan prepares for growth; Pinetree, Pacific to sell stock-and-warrant units

By Kenneth Lim

Boston, June 20 - INX, Inc. said it is taking advantage of recent gains in its stock price to strengthen its balance sheet with an approximately $9.9 million stock placement.

Meanwhile, Argan, Inc. said it is raising between $20 million and $25 million from a stock offering to address a welcome problem of a backlog of orders.

Pinetree Capital Ltd. announced a C$40 million placement of stock and warrants, while Austral Pacific Energy Ltd. said it is raising $7 million.

INX raises near high

INX plans to sell about $9.9 million worth of stock in a direct offering, and the company said the deal will be used to improve its balance sheet.

The company is selling 900,000 shares in the offering, which is being placed through Raymond James & Associates, Inc.

INX common stock (Nasdaq: INXI) closed at $11.01 on Friday, lower by 11.25% or $1.39.

INX, a Houston-based provider of internet-based enterprise network solutions, said it will use the proceeds to retire about $6 million worth of outstanding debt under its acquisition credit facility. The remainder of the proceeds will be used for general corporate purposes. The company may also use some of the proceeds, together with available cash and credit to fund future acquisitions.

"With the general tightening of the credit markets that has occurred over the past year, INX's financial strength has been a growing competitive advantage in the market," said INX chairman and chief executive James Long in a statement.

"The proceeds from this equity offering will improve INX's financial strength, and enhances our ability to continue what has been a very successful program of acquiring complementary businesses. The offering will also broaden INX's institutional investor base, increase market float and potential trading volume and shareholder liquidity, and initiates important new relationships with a list of high quality institutional investors."

INX chief financial officer Brian Fontana said the deal will place the company on a stronger financial footing.

"Consummating this deal pays off all of our long-term debt," Fontana told Prospect News. "We have a $60 million line of credit to fund working capital, and have the acquisition credit facility. Most of the transactions that we do, we use a mix of cash and stock...We're really well positioned. We feel really good about where we are."

INX has been "growing rapidly both organically and through acquisitions," and remains on the acquisition path. The stock price has jumped by more than 50% over the past three months, and the company saw an opportunity, Fontana said.

"We decided to go to the market to see if we could do an equity raise to strengthen our balance sheet," he said. "We have some other acquisitions, none of which we have any commitment to do... This is some dry powder, if you will, to continue our growth plan. Our stock has reacted favorably to our plans so far. It's opportunistic, and it's not terribly dilutive."

Fontana said the company was satisfied with the pricing.

"Or we wouldn't have done it," he said. "We didn't have a gun to our head. We could have pulled this deal at any time."

Argan readies for growth

Argan said it will sell between $20 million and $25 million worth of common stock through a private placement.

Pricing had not been set. Argan common stock (AMEX: AGX) closed at $13.77 on Friday, higher by 0.51% or $0.07.

Argan is a Rockville, Md.-based diversified holding company with businesses in the power industry, telecommunications infrastructure and nutritional supplements. It will use part of the proceeds for a planned joint venture with Invenergy Wind LLC and the remaining for general purposes.

The Invenergy venture is being carried out by Argan subsidiary Gemma Power Systems, which is Argan's largest unit, Argan chief financial officer and senior vice president Arthur F. Trudel told Prospect News.

"That business is growing pretty dramatically," Trudel said.

The company needs to raise money at this time because of the rapid growth at Gemma, which is facing a backlog in its business, Trudel said.

"We're at an inflection point," he said. "With these announced contracts, our backlog has increased dramatically. We're looking to continue that growth."

He said the backlog was actually a welcome problem.

"That's the future health of your company," he said.

Trudel said the company decided on a plain vanilla stock offering because it did not want to take on additional debt and issue preferred stock.

"We believe in having one class of common stock," he said. "We don't normally issue any other kind of stock. Our stakeholders are basically our partners with us in this company...We're risk averse."

Pinetree to sell units

Pinetree Capital announced a C$40 million placement of stock and warrant units.

The company is selling 16 million units at C$2.50 apiece. Each unit consists of one common share and a half-share warrant. Each whole warrant is exercisable for five years at C$3.50.

There is an over-allotment option for an additional C$6 million, or 2.4 million units.

Up to 4.2 million of the units may be purchased by insiders.

Pinetree common stock (TSX: PNP) dropped 9.54% or C$0.25 to close at C$2.37 on Friday.

Pinetree, a Toronto-based investment banking company, said it will use the proceeds for future investment activities, debt repayment and for general corporate purposes.

Austral to raise $7 million

Austral Pacific Energy aims to raise $7 million through a placement of units.

Its deal involves 14 million units at $0.50 apiece. The units consist of one common share and one half-share warrant. The whole warrants are exercisable at $1.00 apiece for 15 months.

Austral Pacific common stock (AMEX: AEN) settled at $0.47 on Friday, down by 6% or $0.03.

The company already has received $5.61 million of the proceeds and the balance is expected to be received before the settlement date, June 23.

Austral Pacific, a Wellington, New Zealand-based oil and gas exploration company, said it will use the proceeds to fund drilling programs and for working capital.

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