ScanSoft raises $75.22 million for Nuance merger; volume mostly lags

By Sheri Kasprzak

Atlanta, May 9 - ScanSoft, Inc. kicked off the week with a $75,217,600 private placement to finance its acquisition of Nuance Communications, Inc.

Warburg Pincus purchased a total of 17.74 million shares at $4.24 each, funding $15 million of the investment now and $60 million once the merger is complete.

The price per share is on par with the company's closing stock price on May 5.

Upon closing of the first tranche, Warburg received a warrant for 860,000 shares, exercisable at $5 each for four years. Once the remainder of the investment is received, Warburg will receive a warrant for 3.18 million shares, exercisable under the same terms.

ScanSoft has agreed to acquire all of Nuance's stock at a price of $221 million, based on the closing stock price $4.46 per share on May 6.

"The merger of ScanSoft and Nuance creates a company that combines deep technical capabilities with a broad range of customer-specific expertise," said William Janeway, vice chairman of Warburg Pincus, in a statement. "We are confident that the merged company, as a comprehensive provider of speech solutions, will have the resources and experience to extend ScanSoft's strong operational performance."

ScanSoft's stock closed up $0.07 at $4.53 on Monday, but lost $0.46, or 10.15%, in after-hours trading.

Based in Peabody, Mass., ScanSoft develops speech and imaging technologies.

In the broader private placement market Monday, sell-siders said the week got off to a slow start, but couldn't really point to any particular reason for the lag in volume.

"Really not much to talk about today," said one sell-sider. "There's nothing in particular affecting volume from what I can tell."

Oil prices continued to rise and stocks made some meager gains over the course of the day.

"I don't see anything," said another market source. "Just a slow day. It does come and go. Really depends on what the needs of the issuers are."

Kensington wraps C$31 million deal

Kensington Resources Ltd. finished a downsized private placement for C$31,000,190.

The company sold 4,255,400 flow-through shares at C$2.35 each and 10 million non flow-through units at C$2.10 each.

The units include one share and one half-share warrant. The whole warrants provide for an additional non flow-through share at C$2.50 each for one year.

"I think it looks pretty good," said one market source who had seen the deal.

When asked why the company settled for less than what they had originally planned to raise, the market source said the company's stock had suffered some losses since the deal was priced. The losses, the source said, came from dips in broader natural resources stocks.

"The successful completion of this financing reflects the momentum that is building in the Fort a la Corne Diamond project," said the company's president and chief executive officer Robert McCallum in a statement. "We have been actively building interest in the immense opportunity of diamonds in Saskatchewan and both the market and investors have responded with enthusiasm and support. We, in turn, will continue to be responsible to shareholders and remain vigilant in the co-management of the project so as to drive the pace of this exploration phase as quickly as possible.

Loewen, Ondaatje, McCutcheon Ltd. led a syndicate of placement agents in the deal.

The company first announced the deal on April 22, as a C$35 million offering comprised of 3,404,255.32 flow-through shares and 12,857,142.86 units under the same terms.

After the closing was announced Monday morning, Kensington's stock gained C$0.10 to close at C$2.19.

Based in Vancouver, B.C., Kensington is a mineral exploration and development company. The proceeds from the flow-through shares will be used for exploration on the Fort a la Corne project. The proceeds from the units will be used for exploration on the Fort a la Corne project and for general corporate purposes.

Citadel raises $7 million

Citadel Securities Software Inc. completed a $7 million first tranche of an $11 million private placement.

Satellite Strategic Finance Associates, LLC bought series B convertible preferred stock.

The preferreds do not pay dividends, mature in three years and are convertible into common shares at $1.55 each.

Satellite also received warrants for 2.8 million shares, exercisable at $1.75 each for 10 years.

"This well-respected institutional fund recognizes the market opportunity that Citadel has pioneered in the vulnerability management space," said Steve Solomon, the company's chairman and chief executive officer, in a statement.

Wachovia Securities Corp. was the financial advisor in the deal.

Based in Dallas, Citadel develops software to combat online security attacks.

On Monday, the company's stock closed down $0.08, or 6.11%, at $1.23 and lost another $0.23, or 18.7%, in after-hours trading.

Natural Gas closes $3 million offering

Natural Gas Systems, Inc. sealed a $3 million private placement with a European institutional investor.

The company issued 1.2 million shares at $2.50 each.

"We view this new institutional relationship as a very positive development for NGS and believe that it will enable us to, among other things, accelerate our potential technology applications in the re-development of oil and gas fields," said the company's president, Robert Herlin, in a statement.

Based in Houston, Natural Gas develops oil and natural gas properties. The proceeds will be used for working capital.

Natural Gas's stock closed unchanged at $3 on Monday.

Pico's stock makes gains

Pico Holdings, Inc.'s stock closed up Monday after wrapping a private placement of stock for $22,625,000 on Friday.

The company's stock rose $0.55, or 2.19%, to close at $25.65. On Friday, when the closing was first announced, the company's stock dropped $0.65 to close at $25.10, but gained a penny in after-hours trading.

Pico sold shares at $25 each.

Based in La Jolla, Calif., Pico is a holding company for a water-resource development company and a private landowner in Nevada.

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