Volume slows to crawl as stocks make slight gains; AFS raises C$10 million

By Sheri Kasprzak

Atlanta, May 11 - Private placement volume hit a wall after stocks took a dive Tuesday and made only meager gains Wednesday.

"It really is pitiful out there today," said one sell-side source. "I just don't think stocks made enough gains to make up for yesterday's losses."

The deals that were conducted Wednesday were mostly from the natural resources sector.

"Oil was up [Tuesday] so you had a few small deals from that sector," said one market source.

"Natural resources stocks have been reasonably strong lately, so we've seen some of those deals as well. But it [volume] has been really, really depressed for the most part."

Oil dipped on Wednesday, closing down $1.62 at $50.65 per barrel. On Tuesday, oil gained $0.04 to close at $52.07 per barrel.

The Dow Jones Industrial Average gained 19.14 to close at 10,300.25 after diving 103.23 to close at 10,281.11 on Tuesday; the Nasdaq composite index edged up 8.78 to close at 1,971.55 after losing 16.9 to close at 1,962.77 and the S&P 500 closed up 4.89 to end at 1,171.11 after dropping 12.62 to close at 1,166.22 Tuesday.

Wednesday's volume was a stark contrast to Tuesday's boosted issuance following a surge in stocks early in the week and late last week.

A Canadian oil exploration company, AFS Energy Inc., led private placement news Wednesday after announcing the closing of its C$10 million offering late in the day.

The company issued 10,000 series U subscription receipts, exchangeable for one common share each, at C$1,000 per receipt.

The subscription receipts are exchangeable for common shares upon the completion of the company's reorganization, after which its name will be changed to Flagship Energy Inc.

GMP Securities Ltd. was the lead placement agent in the offering.

Based in Calgary, Alta., AFS Energy is an oil and natural gas exploration company.

The company's stock closed unchanged at C$0.18 on Wednesday.

Peregrine wraps $3 million deal

Moving away from private placements, Peregrine Pharmaceuticals, Inc. closed a direct placement Wednesday for $3 million.

The company issued 3,125,000 common shares at $0.96 each to a single investor.

"For a direct placement, it's a little low," said one market source who follows the biopharmaceutical industry. "There's really nothing that I can point to that should lead them to price this low, so it's hard to say."

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

Based in Tustin, Calif., Peregrine develops treatments for cancer.

Peregrine's stock lost $0.02 to close at $1.18 Wednesday and lost another $0.03 in after-hours trading.

Campbell raises C$5 million

Campbell Resources Inc. closed a private placement of unsecured convertible promissory notes with RAB Special Situations Master Fund Ltd. for C$5 million.

The three-year notes bear interest at 1% per month and are convertible into units at C$0.38 each for three years.

The units are comprised of one share and one half-share warrant. The whole warrants allow for an additional share at C$0.38 each for three years.

After the deal was announced Wednesday morning, Campbell's stock dropped C$0.03, or 8.82%, to close at C$0.31.

Based in Montreal, Campbell is a gold and gold-copper mining and exploration company. The proceeds from the private placement will be used for working capital and to complete its Copper Rand project.

Metalex closes C$2.3 million offering

Metalex Ventures Ltd. finished a downsized private placement of common and flow-through shares for C$2.3 million.

The company sold 1,529,411.765 common shares and 1,176,470.588 flow-through shares, both at C$0.85 each.

Metalex first announced the deal March 11 as a C$3 million offering comprised only of common shares priced at C$1 each.

Based in Kelowna, B.C., Metalex is a diamond exploration company. It plans to use the proceeds for exploration.

MagIndustries' stock closes unchanged

A day after closing a $12.1 million private placement, MagIndustries Corp.'s stock didn't budge on Wednesday.

The company's stock closed at $0.76 Wednesday after closing unchanged on Tuesday as well.

The company sold units at $0.75 each after revamping the deal a few times.

MagIndustries also closed a $2.9 million non-brokered deal on Tuesday.

Based in Halifax, N.S., MagIndustries provides magnesium alloys for the automotive industry.

ScanSoft's stock improves

After suffering a 16.78% drop in its stock when it announced the closing of its $75,217,600 private placement Monday, ScanSoft Inc.'s stock made a slight recovery Wednesday.

The company's stock gained $0.16, or 4.24%, to close at $3.93 Wednesday before losing a penny in after-hours trading.

On Tuesday, the company's stock lost $0.76 to close at $3.77 after gaining $0.07 to close at $4.53 when the deal was first announced Monday. In after-hours trading Monday, ScanSoft's stock lost $0.46, or 10.15%.

The company sold shares at $4.24 each as part of its acquisition of Nuance Communications, Inc.

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

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