Gales Industries settles $6.8 million PIPE; Ameritrans Capital raises $3.82 million from stock deal

By Sheri Kasprzak

New York, Dec. 6 - Gales Industries Inc. led private placement news with word that it closed a $6,793,280 private placement of convertible preferred stock.

The offering was conducted as part of Gales' merger with Ashlin Development Corp. and its acquisition of Air Industries Machining, Corp.

The automotive accessory company issued 679,328 shares of convertible preferred stock at $10.00 each.

The preferreds, which were exchanged for series A convertible preferred stock of Ashlin, are convertible into a total of 30,878,855.2 common shares.

The Gales-Ashlin merger wrapped up on Nov. 30.

As a condition of the merger, Ashlin effected a 1-for-1.249419586 reverse stock split that reduced the number of shares outstanding on a fully diluted basis to 3,768,000 from 4,707,813.

GunnAllen Financial, Inc. was the placement agent for the offering.

Proceeds will be used for costs associated with the merger.

Under the terms of Boca Raton, Fla.-based Gales' acquisition of AIM, Gales paid $3,114,296 in cash, $1,627,262 in principal of promissory notes and 490,060 common shares.

On Tuesday, Ashlin's stock fell $0.045, or 7.38%, to close at $0.565.

Ashlin filed for Chapter 11 bankruptcy protection on Oct. 15, 2004 and has been operating under a plan of reorganization ever since. On Jan. 28, the company sold almost all of its assets to TeeZee, Inc.

For the quarter ended June 30, Ashlin reported a net loss of $144,830, compared with a net loss of $868,947 for the same quarter in 2004.

Elsewhere in the PIPE market, Ameritrans Capital Corp. wrapped a $3,822,080 stock deal.

A group of accredited investors bought 653,347 shares at $5.85 each. The investors received one warrant for every four shares purchased. The warrants are exercisable at $6.44 each for five years.

The company's stock closed down 7 cents at $5.00 Tuesday.

Based in New York, Ameritrans is a specialty finance company focused on loans to small businesses.

Datrek Miller raises $2 million

Datrek Miller International, Inc., a Springfield, Tenn.-based company that supplies products to the golf industry, settled a $2 million private placement of convertible preferred stock Tuesday.

The company sold 1 million shares of series B convertible preferred stock at $2.00 each to Stanford International Bank Ltd.

Stanford agreed to buy 500,000 additional preferreds at the same price before the end of December.

The preferreds are convertible into common shares at $2.00 each and do not pay annual dividends.

The investor received warrants for 600,000 shares, exercisable at $2.00 each for five years and will receive another 300,000 warrants once the additional preferreds have been purchased.

Stanford has the option to buy up to 2.5 million additional shares of the preferreds and up to 1.5 million warrants in the next two years.

Stanford is a tremendous partner in our business," said Mike Hedge, the company's president, in a statement. "Golf is an important part of their portfolio and we appreciate the confidence they have in our business plan. By having these funds available, we can aggressively grow through investing in our current holdings and by proactively seeking out acquisition opportunities."

"Datrek Miller International caught our attention as an innovated and entrepreneurial company," said James Davis, director of Stanford, in a statement. "At Stanford, we look to partner with organizations that represent quality and commitment. An alliance with Datrek Miller is also a natural fit to our sports-marketing efforts."

Proceeds will be used for working capital and potential acquisitions.

Datrek Miller's stock closed unchanged at $1.10.

PIPE volume improves slightly

Looking to the broader PIPE market, one sellside source said volume increased slightly as stocks improved.

"Things seem to be a bit more active today," said the source. "Stocks look OK."

Oil prices continued to rise but not enough to shove stocks down.

The Dow Jones Industrial Average gained 21.85 to end at 10,856.86, and the Nasdaq composite index settled up 3.12 at 2,260.76. The Standard & Poor's 500 composite index edged up 1.61 to finish at 1,263.70.

Oil prices were nudged up 3 cents to close at $59.94 per barrel as cold weather predictions continued to prevail.

SemBioSys prices C$10.3 million offering

Moving to Canada, SemBioSys Genetics Inc. announced its plans to conduct a private placement for C$10.3 million.

The offering includes 2,576,000 units at C$4.00 each.

The units consist of one share and one half-share warrant. The whole warrants are exercisable at C$5.50 each for 30 months.

The deal is being placed through a syndicate of underwriters led by Orion Securities Inc. The underwriters have an over-allotment option for up to half of the units offered in the deal.

The offering is slated to close Dec. 20.

Proceeds will be used for product development, working capital and general corporate purposes.

Located in Calgary, Alta., SemBioSys is a biotechnology company focused on developing protein-based pharmaceutical products to treat cardiovascular ailments.

The company's stock remained unchanged at C$3.75 Tuesday.

Trafina plans C$3.48 million deal

Heading to the natural resources sector, Calgary, Alta.-based Trafina Energy Ltd. priced a C$3,487,200 private placement.

The deal includes 1,111,000 class A shares at C$2.70 each and 150,000 flow-through shares at C$3.25 each.

After the offering was announced Tuesday afternoon, the company's stock gained 11.11%, or C$0.30, to close at C$3.00.

Acumen Capital Finance Partners Ltd. is the placement agent.

Proceeds will be used for the company's winter capital expenditure program and for general corporate purposes.

The deal is slated to close Dec. 22.

Trafina is an oil and natural gas exploration company.

Queenston stock gains 4.3%

Looking to the gold sector, Queenston Mining Inc.'s stock closed up C$0.04 to end at C$0.97 Tuesday after the company priced a C$1.5 million offering of 1.5 million flow-through shares.

The Toronto-based gold explorer intends to sell the shares to two flow-through funds.

The price per share is a 7.5% premium to the company's closing stock price of C$0.93 on Dec. 5 and is an 18% premium to the 10-day volume weighted average price.

The offering, according to a market source who follows natural resources stocks, was well-priced.

"It looks really, really good to me," he said. "When you can price at a premium like that, it shows some strong demand."

He noted that gold prices reached historical highs on Tuesday, climbing $1.30 to close at $511.20 per ounce after hovering around $500 per ounce for more than a week.

"I'm seeing mostly smaller ones [gold offerings], things I don't normally follow," he noted. "I do think we'll likely see bigger gold deals now that gold prices are at this level. Minerals in general, I think, particularly copper, are going to benefit in kind."

Proceeds will be used for ongoing exploration at the company's Kirkland Lake, Ont., and Cadillac gold projects.

Longview Resources' stock gains 7.5%

A day after pricing a C$2,002,000 PIPE, Calgary-based oil explorer Longview Resources Corp.'s stock rose.

The company's stock advanced C$0.04, or 7.55%, to end the day at C$0.57.

On Monday, when the offering was priced, the company's stock slipped C$0.02 to close at C$0.53.

"Oil in general has been up," said one market source of the climbing Longview stock. "They were down yesterday even though oil was up, so I'm inclined to say it [the offering] did have some impact."

Longview hopes to sell flow-through shares at C$0.65 each.

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