SCO Group wraps $10 million PIPE; Electric City seals up $5 million convertible loan deal

By Sheri Kasprzak

New York, Nov. 30 - The SCO Group, Inc. led a lighter day for private placements, completing a $10 million private placement with a group of existing institutional investors and one of its board members.

The Lindon, Utah-based software company issued 2,852,449 shares at $3.50 each to the institutions and at $3.92 each to the board member.

As of Sept. 8, the company had 18,037,735 outstanding common shares.

"Our current strategies have continued to focus on creating innovative mobile technologies for new customers, delivery reliable UNIX products for existing customers and protecting our intellectual property rights for all company stakeholders," said Darl McBridge, the company's chief executive officer, in a statement. "This added investment is a vote of confidence by our existing investors that will bolster our efforts over the long term to succeed in the marketplace with our products and continue protecting our intellectual property."

Proceeds will be used for the company's business strategies, including the resolution of a legal matter.

The closing was announced late Wednesday, and the company's stock gained 8 cents, or 1.96%, to end at $4.16.

As to its earnings, SCO reported a net loss of $2,372,000 for the quarter ended July 31, compared with a net loss of $7,423,000 in the corresponding quarter of 2004.

The company develops UNIX software technology for distributed, embedded and network-based systems.

Electric City raises $5 million

Elsewhere in the PIPE market Wednesday, Electric City Corp. announced the completion of its $5 million loan offering with Laurus Master Fund, Ltd.

Laurus bought a convertible term loan with a four-year term and a conversion price of $1.16. The investor has the option to buy up to $5 million in additional principal.

The loan bears interest at the greater of Prime rate plus 200 basis points or 6.75%.

Electric City may force conversion of the loan if the company's stock averages at least $2.32 - or 200% of the conversion price - for the last 10 days of any month. If the company's stock price exceeds $1.33 - or 115% of the conversion price - Laurus will be required to convert the monthly principal and interest to common shares.

Laurus will receive warrants for 2 million shares, exercisable through Nov. 22, 2012 at $1.16 each.

Proceeds will be used for the expansion of the company's Virtual "Negawatt" Power utility systems. The rest will be used for general corporate purposes.

"Completing this transaction was critical to our 2005 plan and to our strength in 2006," said John Mitola, the company's CEO, in a statement released late Wednesday. "We are pleased to close this first round of asset financing as we set the stage for 2006.

"Our goal was to close a first round of debt before the end of the year. Therefore, we are very pleased we were able to put this transaction together by the end of November. This should allow us to carefully plan the deployment of systems to craft a solid start to 2006.

"With this financing, we are expanding a relationship with a lender we already know well and have enjoyed a strong relationship with over the past few years. After evaluating many various options over the past several months, we believe that this structure is far more favorable to traditional project financing given the needs of our business and our customers at this time. Given its flexibility as corporate debt, we believe it puts us in a position to more readily capture opportunities we have been developing with new utilities and large customers."

Jeff Mistarz, the company's chief financial officer, said in the same statement that the conversion price of the loan was well above the company's current market price.

"While the funding is a four-year loan, it carries a 10-year amortization schedule which corresponds with the general revenue stream of what we expect to be the underlying VNPP and shared savings assets," Mistarz said, referring to two of the company's technologies. "We also structured the loan as a convertible instrument with a conversion price set a $1.16 per share - well above our current market price. If our stock performs well, ELC and its shareholders should gain additional annual cash flow for every dollar of the loan that is converted into stock, thereby creating a win-win for all parties."

On Wednesday, the company's stock edged up, gaining 2 cents to close at $0.80.

For the quarter ended Sept. 30, Electric City reported a net loss of $2,014,095 compared with a net loss of $1,297,493 for the same quarter of 2004.

Located in Elk Grove Village, Ill., Electric City makes energy saving technologies and building automation systems.

PIPE volume takes a break

One market source reached Wednesday said private placement volume was slower than it has been for the past two weeks or so, due mainly to a shaky stock market and unpredictable oil prices.

"Stocks didn't really know what direction they were going today," he said. These are "not really the best conditions to [price]."

Oil prices, which had been heading southward on Wednesday rebounded to gain $0.82 and close at $57.32 per barrel.

Stocks, however, closed mostly down with the Dow Jones Industrial Average losing 82.29 to settle at 10,805.87 and the Standard & Poor's 500 composite index slipping 8 to end at 1,249.48. The Nasdaq composite index edged up 0.11 to finish at 2,232.82.

Berens Energy leads Canadian deals

Calgary, Alta.-based oil explorer Berens Energy Ltd. led private placement offerings in Canada on Wednesday, pricing a C$33.73 million offering of subscription receipts and flow-through shares to finance its acquisition of Berland Exploration Ltd.

The company intends to place 8.2 million receipts at C$2.50 each and 4.2 million shares at C$3.15 each.

The receipts will be exchanged on a one-for-one basis for common shares once the acquisition is settled. The acquisition is expected to close before Feb. 15, 2006.

The private placement is being completed through a syndicate of underwriters led by Peters & Co. Ltd. and is expected to wrap up on Dec. 22.

Under the terms of the acquisition, Berland shareholders will receive the equivalent of C$0.96 in cash per Berland share and 0.8784 of a Berens common share for each Berland share.

The company's stock gained C$0.03 Wednesday to close at C$2.78.

Elsewhere in the oil sector, Expedition Energy Inc., also based in Calgary, priced a C$3.51 million offering of 1.8 million units at C$1.95 apiece.

The units include two flow-through shares and one non flow-through share.

The deal is expected to close on Dec. 15.

Proceeds will be used for exploration and development on the company's properties in Alberta and Saskatchewan.

On Wednesday, Expedition's stock gave up C$0.03 to end at C$0.57.

Newmex Minerals' C$16.25 million offering

Looking to other parts of the natural resources sector, Newmex Minerals Inc. announced its plans to hit the PIPE market with a C$16.25 million deal comprised of 5 million units.

The units consist of one share and one half-share warrant, the whole of which is exercisable at C$4.00 each for two years.

The deal is slated to close Dec. 9.

Proceeds will be used for working capital.

Newmex is based in Calgary. Its stock remained unchanged at C$3.40 Wednesday.

Global Alumina stock slips 1.6%

A day after announcing its plans to sell $50 million in shares to IDB Infrastructure Fund LP, Global Alumina Corp.'s stock fell slightly Wednesday.

The company's stock ended the day down $0.027, or 1.59%, to close at $1.673.

On Tuesday, after the stock deal was announced, the company's stock climbed 4 cents, or 2.41%, to settle at $1.70.

The offering, which is being conducted to help finance an aluminum refinery, calls for the sale of shares at $2.25 each.

Toronto-based Global Alumina is a bauxite exploration company.

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