Patient Safety sees $2.55 million; Kagara attempts A$10 million, Flagstar Bancorp increases issue

By Devika Patel

Knoxville, Tenn., Feb. 3 - Patient Safety Technologies, Inc. raised $2.55 million for its primary operating subsidiary, SurgiCount Medical, Tuesday so that the provider of tracking systems for surgical sponges would have funds to support its continued growth.

Separately, mineral explorer Kagara Ltd. arranged a A$10 million private placement of shares to raise money for its projects, which recently have produced a significant amount of copper, zinc, nickel and lead, offsetting some of the losses the company has seen due to recently falling commodities prices.

And after the close on Monday, Flagstar Bancorp, Inc. increased a private placement of convertible preferred shares to $350 million from $250 million and amended the terms to include 10% trust preferred securities.

Patient Safety gets $2.55 million

Patient Safety sold $2.55 million in senior secured notes Friday, according to a Tuesday 8-K filing with the Securities and Exchange Commission.

The company sold the notes with five-year warrants for 1.53 million common shares, which can be exercised at $1.00.

The notes, due Jan. 29, 2011, carry a 10% coupon.

The financing was intended to raise capital for the company's subsidiary, a manufacturer of the Safety-Sponge system.

The Safety-Sponge system is a turn-key array of modified surgical sponges, line-of-sight scanning SurgiCounters and printPAD printers integrated together to form a counting and documentation system.

"As hospitals face greater scrutiny, disclosure requirements and fines related to surgical complications that should be avoidable, so called 'Never Events,' the value proposition of the Safety-Sponge system continues to translate into increased customer adoption. The system has been successfully used in over 250,000 procedures at a growing list of leading institutions," Patient Safety Technologies chief executive Dave Bruce stated.

Based in Temecula, Calif., Patient Safety is a developer and manufacturer of patient safety products and services, with a market capitalization of $18.9 million. Its shares (OTCBB: PSTX) were unchanged to close at $1.10 on Tuesday.

Kagara tries for A$10 million

West Perth, Australia's mineral explorer Kagara announced plans to raise A$10 million through a stock sale.

The company will sell 25 million of its shares to an affiliate of Transamine, a concentrate off-take partner, at A$0.40 per share.

The placement, representing about 11.5% of the shares on issue prior to the placement, will raise funds that will be used for general working capital and to assist the company in progressing the development of the numerous high-quality assets in its portfolio of projects.

Last year's slump in zinc and copper prices means Kagara isn't making a profit, it said in a Jan. 29 press release. Over the final quarter of 2008, copper revenue received fell to $2.62 per pound from $3.21 per pound.

Kagara said the lower prices resulted in the zinc cash cost increasing to $0.58 per pound of payable zinc from $0.47 per pound.

As a result, the company's net income in the year ended June 30 dropped 28% to A$65 million.

Kagara's shares (Australia: KZL) remained unchanged at A$0.38 Tuesday.

Flagstar adds $100 million

Flagstar has increased a private placement of preferreds to $350 million, which it announced after the close Monday.

The deal priced for $250 million on Dec. 17, but on Jan. 30, the company agreed to sell another $50 million in preferreds and $50 million in trust preferred securities to MP Thrift Investments LP. The company sold 250,000 preferreds at pricing.

The preferreds may be converted into 312.5 million common shares at $0.80.

The 10% trust preferred securities may be convertible into common stock on April 1, 2010 at a conversion price equal to the volume-weighted average price of the common stock from Feb. 1, 2009 through April 1, 2010.

At pricing, the company's vice chairman and chief executive officer, Mark Hammond, said the savings and loan holding company aims to raise more capital than it has historically needed in order to continue to grow due to recent setbacks in real estate markets.

"This capital infusion will fortify our balance sheet, allowing us to grow our banking franchise and to continue our mission of being a top national originator and servicer of high quality residential mortgage loans," Hammond said in a press release.

"Given the difficulties in the capital and residential real estate markets, we continue to aim to operate at capital levels in excess of our historical norms so that we are positioned to support continued growth in our conforming loan originations while addressing any potential credit losses or asset writedowns. We believe that this transaction is a necessary step in meeting these goals and we welcome MatlinPatterson to the Flagstar family," Hammond continued.

MP Thrift Investments chief executive officer David Matlin said in the same release that the investment was "an exciting investment opportunity" and that he was looking forward to "building upon Flagstar's unique franchise."

Flagstar is based in Troy, Mich. Its shares (NYSE: FBC) dropped 6.49%, or 5 cents, to close at $0.72 Tuesday. The market capitalization is $60.2 million.

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