Crosstex plans $125 million deal; Oxus Gold to raise $85 million; China Medicine to sell stock

By Stephanie N. Rotondo

Portland, Ore., Jan. 7 - Big deals returned to the PIPEs market Thursday, as new financings came to market ranging from $5 million to $125 million.

Crosstex Energy Inc. and Crosstex Energy LP announced the $125 million deal, a private placement of preferred units. The company intends to use proceeds to improve its balance sheet.

Meanwhile, Oxus Gold plc said it would raise $85 million via a private sale of ordinary shares and convertible loan notes. A consortium of Chinese investors has agreed to purchase the securities.

China Medicine Corp. will take in more than $69 million from a private placement of preferred and common shares, the company said in a press release. A JPMorgan Chase & Co. subsidiary is the investor.

Also, China Information Security Technology Inc. said it was seeking $10 million via a registered direct offering of stock and warrants. Proceeds will be used for corporate purposes.

And, Eagle Oil Holding Co. Inc. got a $10 million equity facility with a private equity fund. Viking Systems Inc. also arranged a new $5 million equity facility.

Crosstex plans $125 million deal

Crosstex Energy will issue $125 million private placement of preferred units to Blackstone/GSO Capital Solutions funds, according to a press release.

The units will contain series A convertible preferred shares and will be sold at $8.50 per unit. The units are convertible into common share units on a 1 for 1 basis.

The preferreds pay a quarterly distribution that will be the greater of $0.2125 per unit or the amount of the distribution per unit paid to common unitholders. The $0.2125 quarterly distribution is equivalent to 10% annually and is payable in cash or kind or a combination.

"We are extremely pleased that Blackstone and GSO have demonstrated their confidence in our business and future by making this substantial investment, and we welcome them as a significant investor," said Barry E. Davis, president and chief executive officer, in the release.

"This additional capital, combined with our asset sales and other cash flow initiatives, is the latest step in our plan to improve our balance sheet and accelerates our ability to refinance our existing debt and ultimately restore our distributions and dividends," Davis said.

"Crosstex is a premier midstream energy services provider with strategically-located assets in some of the most attractive regions in the United States," added Dwight Scott, senior managing director at GSO. "We are excited about Crosstex's prospects as it executes the final stage of its financing plan and positions itself to grow. We look forward to the opportunity for future investments in and with the Crosstex companies as they execute their strategy to create value for unitholders and shareholders."

Crosstex's equity (Nasdaq: XTXI) jumped 65 cents, or 9.89%, to $7.22. Market capitalization is $483 million.

Crosstex Energy is a Dallas-based midstream natural gas company.

Oxus to raise $85 million

Oxus Gold, a London-based gold exploration company, negotiated an $85 million private placement of ordinary shares and convertible loan notes.

The company will sell 573 million of the shares at 6p per share. In addition, Oxus will issue $30 million of the three-year convertible loan notes.

The 10% notes are convertible into approximately 267.85 million ordinary shares at 7p per share. The notes bear interest at 300 basis points above six-month Libor and mature November 2014.

Also, investors will receive warrants equal to approximately 89.28 million ordinary shares, exercisable at 7p for five years, and warrants good for another 62.5 million shares, exercisable at 10p for five years.

Among the investor group was Baiyin Non-Ferrous Group Co Ltd., Citic Construction Co Ltd. and Chang Xin Yuan Su (Tianjin) Equity Investment Fund Management LP.

Proceeds will be used for working capital, as well as for financing and developing the company's 50% interest in the Amantaytau Goldfields joint venture in Uzbekistan

"I am delighted that we have reached agreement with the Chinese consortium to provide this financing to the company," said Richard Shead, chairman, in a prepared statement.

"The majority of these funds will be loaned to AGF, where we would hope to expand production to approximately 300,000 ounces a year, and also do justice to the very significant exploration potential within the license area, particularly with regard to the high grade underground project."

"Oxus will also be able to draw on the Concert Party's extensive technical expertise and we very much look forward to working with them. All parties will now focus on obtaining the relevant governmental agreements and approvals as soon as possible, and we continue to target 2011 for first gold production from the underground mine at AGF."

Oxus' shares (London: OXS) ended at 9p. Market capitalization is £34.2 million.

China Medicine to sell equity

China Medicine intends to raise $69.6 million via a private placement of preferred and common shares, the company announced.

The deal originally priced Dec. 31, according to a regulatory filing. One Equity Partners, a subsidiary of JPMorgan Chase & Co., is the investor.

The company will sell 4 million common shares at $3.00 per share. Also, about 1.92 million redeemable convertible preferred shares will be issued at $30.00 per share. The preferreds are convertible into 10 common shares.

"We are delighted by OEP's endorsement of our business strategy as we move higher in the pharmaceutical value chain by combining manufacturing capabilities with our nationwide distribution network and exciting new products," said Senshan Yang, chairman and CEO of China Medicine, in a press release.

"These include our proprietary recombinant Aflatoxin Detoxifizyme (rADTZ), a novel product for removing aflatoxins found in food and animal feed that we believe holds significant potential for future growth. Going forward, our strategy is to focus on developing and building brand recognition nationally to enhance the value of our enterprise," Yang said.

"OEP is very impressed with China Medicine's management team," added Ryan Shih, resident partner for OEP based in Hong Kong. "With the LifeTech acquisition, the company is transforming into a vertically integrated distributor and developer of compelling products with attractive growth potential."

"The company has established a leading position in China's fast-growing pharmaceutical market, and we believe that the management team has the vision to capitalize on an extensive distribution network for medicines as well as develop innovative new products including new medicines and other products such as rADTZ," Shih said.

Settlement is expected by March 17.

China Medicine's stock (OTCBB: CHME) improved by 39 cents, or 10.77%, to $4.01.

China Medicine is a Guangzhou, China-based distributor of pharmaceutical and medical products.

China Information brings direct offering

In other U.S.-listed, China-based companies, China Information Security Technology brought a $10.16 million registered direct offering of equity to market.

The company will issue approximately 1.65 million common shares at $6.15 per share. Warrants for another 816,008 will also be issued. The warrants are exercisable at $6.15 for 45 days.

Proceeds will be used for general corporate purposes.

China Information's shares (Nasdaq: CPBY) fell $0.1101, or 1.71%, to $6.099. Market capitalization is $296 million.

China Information Security Technology is a Shenzhen, China-based application software developer, systems integrator and Geographic Information Systems solutions provider.

Eagle Oil inks equity facility

Eagle Oil Holding Co. secured a three-year $10 million credit line with Auctus Private Equity Fund LLC, the company said in a press release.

According to Connie Helwig, president of Eagle Oil, the price per share will be at the market price as of the drawdown request, less a "standard" discount.

"It's very flexible for us," she said, as the company can draw from the facility as it needs the funds. The proceeds will be used for work on the company's East Texas oilfields, "and maybe some acquisitions along the way."

Eagle's equity (OTCBB: EGOH) closed at $0.12 on Thursday. Market capitalization is gained 2½ cents, or 31.25%, to $0.105.

Eagle Oil Holding Co. is a Reno, Nev.-based oil and gas producer and explorer.

Viking gets credit line

Viking Systems inked an agreement for a $5 million equity line of credit with Dutchess Opportunity Fund, II, LP.

The investor will purchase common shares over the course of three years. The price per share will equal the volume-weighted average market price, less a 4% discount.

"We expect that this flexible financing arrangement will provide Viking with the capital required to fund the launch of our 'Next Generation' 3DHD camera system," commented Jed Kennedy, president and CEO, in a press release. "With this agreement in place, Viking has strengthened its financial position and is fully prepared to expand its presence in the minimally invasive surgical market."

"We are excited about being a partner to Viking to provide the funding needed to see the company through to its full potential," said Douglas Leighton, managing director of Dutchess. "We believe in the management's efforts to grow the company and this facility will allow the company to access capital while being inexpensive and flexible. In these hard economic times, Dutchess continues to finance the growth of promising companies such as Viking."

Viking's stock (OTCBB: VKNG) increased by 3.2 cents, or 12.31%, to $0.292. Market capitalization is $13.2 million.

Viking Systems is a Westborough, Mass.-based manufacturer of visualization systems for minimally invasive surgery.

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