Schuff raises $30 million from notes offering; Foothills pockets $22.5 million from PIPE

By Sheri Kasprzak

New York, Sept. 11 - Private placement activity cranked back up Monday, fueled by improving stocks and falling oil prices.

"Oil is going the direction we like it to for a change," said one sellsider when reached Monday afternoon. "Stocks are up and things seem to be improving in general. I think we're about to head into a period of serious volume."

Looking to stocks, the Dow Jones Industrial Average gained 4.73 to end at 11,396.84, and the Nasdaq composite index edged up 7.46 to close at 2,173.25. Standard & Poor's 500 composite index settled up 0.62 to end at 1,299.54.

Heading up the activity on Monday was a $30 million convertible notes deal settled for proceeds of $29.4 million by Schuff International, Inc.

The 7% notes were issued at a 98% of par and are due 2013. The notes are convertible into 2.5 million common shares at $12.00 each. The conversion price is a 14.3% premium to the company's $10.50 closing stock price on Friday.

Word of the offering sent the company's stock up 50 cents, or 4.76%, to round out the session at $11.00 (Pink Sheets: SHFK).

The proceeds from the deal will be used to retire $30 million of its outstanding $75 million in principal of 10.5% senior secured notes due June 1, 2008. The company will pay 101.313% of face value of the notes plus interest.

Also, the company has chosen to redeem another $29.2 million in principal of the senior notes, also at 101.313% of principal plus interest with cash on hand and a $25 million expansion on an existing credit facility with Wells Fargo Bank.

Phoenix-based Schuff International provides steel construction services.

Foothills' $22.5 million deal

In the natural resources sector, Foothills Resources Inc. concluded a $22.5 million private placement and, despite this and a $42.5 million mezzanine finance facility with Goldman, Sachs & Co., saw its stock dive by 10.5% on the day.

The stock fell 10.53%, or $0.36, to end at $3.06 (OTCBB: FTRS).

The company issued 10 million units of one share and one half-share warrant. Goldman, Sachs funded $7.5 million of the placement.

The whole warrants are exercisable at $2.75 each for five years.

Sanders Morris Harris Inc. was the placement agent for all of the units except the 3,333,333 purchased by Goldman.

Separately, the company entered into a $42.5 million mezzanine finance facility with Goldman. The facility has a term of four years.

Also, Foothills announced that it closed the acquisition of four oil fields in southeastern Texas from TARH E&P Holdings, LP.

"This acquisition brings a stable net daily production of about 700 barrels of oil per day and a strong oil reserve base of about 5.1 million barrels of proven reserves," said Dennis Tower, the company's chief executive officer, in a news release. "This provides a solid foundation on which the company can build."

Tower did not return calls for comment on the deal by press time Monday.

According to the company's latest earnings statement, Foothills reported a net loss of $1.45 million for the quarter ended June 30, compared with a net loss of $1.58 million for the corresponding 2005 quarter.

Bakersfield, Calif.-based Foothills is an oil and natural gas exploration, acquisition and production company.

Sunrise gets equity line

In other oil news, despite falling oil prices, Sunrise Energy Resources, Inc. received a $20 million equity line of credit from Dutchess Private Equities Fund, LP.

Oil prices, in the meantime, dropped by 64 cents, to close at $65.61 per barrel.

In the Sunrise offering, Dutchess may buy shares of Sunrise at a price equal to 96% of the lowest closing bid price for the five trading days before a draw. The term of the line is two years.

There is a limit on each draw equal to either $250,000 or 200% of the average daily volume of the company's stock for the 10 trading days before a draw multiplied by the three daily closing bid prices immediately before the draw.

The stock remained unchanged at $0.65 Monday (OTCBB: SEYR).

New York-based Sunrise is an oil and natural gas exploration company.

Mega prices PIPE

Looking north of the border, Mega Uranium Ltd. negotiated a C$7,125,000 private placement of 1.5 million flow-through units at C$4.75 each.

The units include share and one half-share warrant. Each whole warrant is exercisable at C$6.00 for 18 months.

A syndicate of agents led by Canaccord Adams Inc. has a greenshoe for up to 500,000 units.

The deal is scheduled to close Oct. 10.

Proceeds will be used for Canadian exploration expenses.

The company's stock slipped by 16 cents, or 3.85%, to settle at C$4.00 (Toronto: MGA).

Toronto-based Mega is a uranium exploration company focused on properties in Australia, Argentina, Mongolia, Bolivia and Canada.

HyperSpace stock slips

After announcing the completion of a $4.55 million PIPE on Friday, HyperSpace Communications, Inc.'s stock settled down on Monday.

The stock fell by 6 cents, or 3.73%, to close at $1.55 (Amex: HCO). The stock climbed by 30.77%, or 40 cents, on Friday to close at $1.70.

The debentures are convertible at $0.75 each.

Proceeds from the placement will be used for debt reduction and working capital.

Denver-based HyperSpace provides IT hardware for mid-sized companies, government agencies and education organizations.

Akorn stock falls

In other secondary market tech news, Akorn, Inc. watched it stock dip on Monday after settling a $3.56 million stock offering late last week.

On Monday, the stock gave up 13 cents, or 3.54%, to close at $3.54, but gained a penny in after-hours trading (Amex: AKN).

The stock climbed by 11 cents to end at $3.67 on Friday when the deal closed.

In the private placement, Serum Institute of India bought 1 million shares of Akorn. The price per share was equal to the company's Thursday closing stock price.

Buffalo Grove, Ill.-based Akorn develops sterile ophthalmic pharmaceuticals.

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