Earnings reports put damper on PIPE volume; aeroTelesis raises $100 million from equity line

By Sheri Kasprzak

New York, July 27 - Potential PIPE issuers may be too busy releasing second-quarter earnings reports to conduct private placements, a few sell-siders said on Wednesday.

PIPE volume has taken a downward turn this week following what had been a week of significant issuance.

"I'm thinking last week, [issuers] were getting those deals out because they knew earnings reports would be coming out," said one sell-sider. "Once this passes [earnings season], it will pick up again, I'm sure."

Another market source agreed.

"Folks are pretty busy right now getting those reports out, so that could very well be the cause," he said. "I can't really point to anything else that would be dragging it down."

In fact, sparked by earnings reports from big-name companies, stocks fared better Wednesday with the Dow gaining 57.32 to close at 10,637.09; the Nasdaq composite index up 10.23 at 2,186.22, and the S&P 500 ending up 5.63 at 1,236.79.

aeroTelesis, a Los Angeles-based voice, data and video communications concern, led private placement news Wednesday with word that it has sealed up a $100 million standby equity distribution agreement with Cornell Capital Partners, LP. The company also snapped up $3 million from convertible debentures purchased by both Cornell and Highgate House Funds Ltd.

After the agreements were announced Wednesday morning, aeroTelesis's stock jumped $0.26, or 18.98%, to close at $1.63.

Under the two-year equity line, Cornell may buy shares at 99% of the lowest volume weighted average price for the five trading days after notice of a draw.

Monitor Capital, Inc. was the placement agent.

As for the debentures, Cornell bought $1.5 million in principal of the 12% debentures and Highgate House the other $1.5 million.

The debentures mature in one year and are convertible into common shares at $1.117 each.

Cornell received warrants for 150,000 shares, exercisable at $3.00 each for five years, and warrants for 75,000 shares, exercisable at $4.00 each for five years.

Highgate House received warrants for 150,000 shares, exercisable at $3.00 each for five years, and warrants for 75,000 shares, exercisable at $4.00 each for five years.

"We are most enthusiastic and pleased to have successfully closed this transaction with Cornell," Joseph Gutierrez, aeroTelesis's president, said Wednesday in a statement. "This was an important event for the company to secure this institutional support."

According to the company's latest earnings report, released July 20, aeroTelesis had 83,437,701 outstanding common shares as of March 31.

For the fiscal year ended March 31, aeroTelesis had revenues of $409,490 and expenses of $1,470,080, for a net loss of $1,060,590. For the same period ended March 31, 2004, the company had total revenues of $60,000 and expenses of $641,684 for a net loss of $581,684.

Alamos gets revolver

Toronto-based gold exploration company Alamos Gold Inc. closed an unsecured revolving credit facility with attached warrants for $10 million.

The one-year facility provided by Standard Bank plc bears interest at Libor plus 275 basis points. The maturity of the line may be extended to two years.

Standard also received warrants for 350,000 shares, exercisable at C$5.80 each for two years.

Victoria Vargas, a spokeswoman for the company, said Alamos had originally planned to conduct a convertible financing but negotiated the revolving credit facility with Standard instead, at Standard's request.

Vargas noted that the revolving line of credit is a facility normally offered by Standard to mineral exploration companies with current production operations.

The offering, Vargas said, was appealing to the company because of the small dilution and low upfront costs involved. The credit line was "easy to carry, easy to close," she said.

The proceeds from the deal will be used for working capital, including the acquisition of more land.

Alamos's stock remained unchanged Wednesday at $3.587.

Constellation prices C$12.5 million offering

Private placements in Canada were led, once again, by a mineral exploration company. With copper, gold and nickel prices on the rise, mineral exploration has been the sector to follow this week.

Constellation Copper Corp. announced its plans to head to the private placement market with a C$12.5 million deal.

The Toronto-based company plans to sell 13,888,889 special warrants at C$0.90 each.

The warrants are exchangeable for one common share and one half-share warrant. The whole warrants provide for the purchase of another common share at C$1.20 each for two years.

A syndicate of underwriters led by Sprott Securities Inc. has an over-allotment option for up to 2,083,333 additional special warrants, exercisable any time before closing.

Proceeds will be used for drilling and expansion of the Flying Diamond deposit in the Lisbon Valley project and the continued expansion of a plant currently under construction.

After the deal was announced Wednesday afternoon, Constellation's stock slipped C$0.02 to close at C$0.92.

Alberta Clipper's C$9 million deal

Moving to the energy sector, Alberta Clipper Energy Inc., one of a few energy sector firms with offerings to come out this week, priced a C$9 million stock offering.

The Calgary, Alta.-based oil and natural gas exploration company plans to sell 2 million shares at C$4.50 through a syndicate of underwriters led by GMP Securities Ltd. and FirstEnergy Capital Corp.

The underwriters have a greenshoe for 300,000 additional shares.

The proceeds will be used for exploration and development as well as general corporate purposes.

Alberta Clipper's stock gained C$0.09 to close at C$4.74 Wednesday.

Another energy company, this one based in Dallas, closed a $1.5 million PIPE offering Wednesday.

Ignis Petroleum Group Inc. sold 3 million units at $0.50 each. The units include one share and one warrant. The warrants provide for an additional share at $1.50 each.

The company plans to use the proceeds for drilling and exploration.

The oil and natural gas exploration company's stock edged up $0.02 to close at $1.39 Wednesday.

Energy Transfer stock rebounds

A day after completing a $105.6 million direct placement of trust units, Energy Transfer Partners, LP's stock made a comeback.

The company's stock gained $0.24 to close at $37.39 Wednesday after slipping $0.15 to end at $37.15 after the closing was first announced Tuesday.

The Dallas-based partnership sold trust units at $35.20 each to a single institutional investor.

The shares were sold under the company's shelf registration.

Energy Transfer owns a portfolio of oil and natural gas assets.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.