More tech issuance expected due to strong stocks; Dobi Medical raises $10.5 million

By Sheri Kasprzak

Atlanta, March 30 - Technology issuers will likely continue proposing private placements Wednesday, according to sell-siders.

"Tech stocks were stronger today, so I fully expect to see some more tech deals out there, probably in the next day or two," said one sell-sider focused on technology and biotechnology companies.

According to that sell-side source, there were a few smaller offerings proposed in the United States Wednesday.

Volume in general slipped Wednesday, in spite of a stronger stock market.

The Dow Jones Industrial Average gained 135.23 to close at 10,540.93; the Nasdaq composite index was up 31.79 to close at 2,005.67 and the S&P 500 ended the day up 16.09 to close at 1,181.45.

"I really can't think of anything in particular," said one market source of why volume was lower.

A drop in oil prices affected Canadian issuance.

Oil was down $0.24 to close at $53.99 per barrel.

Heading up private placement news was the closing of a $10.5 million offering from Dobi Medical International, Inc.

The company issued 21 million shares at $0.50 each.

The investors received warrants for 5.25 million shares, exercisable at $0.75 each for five years and 5.25 million shares, exercisable at $1.25 each for five years.

"That seems like a pretty big discount," said one market source, noting that he was not familiar with Dobi itself.

The company's stock dipped $0.03 to close at $0.77 after the deal was announced Wednesday morning.

"We are pleased to welcome a new and broad-based group of institutional investor, who we believe will contribute valuable support to the company as we move ahead," said Phillip Thomas, the company's chief executive officer and president, in a statement. "We expect this financing will provide sufficient capital to fund our continuing operations into the first half of 2006."

C.E. Unterberg, Towbin LLC was the placement agent.

Based in Mahwah, N.J., Dobi is a medical imaging company focused on diagnosing cancer. The proceeds will be used for a clinical trial research study as a final step for pre-market approval from the FDA for its ComfortScan breast imaging system.

On Wednesday, Dobi's stock closed $0.03 at $0.77.

Lexar pricing was "solid"

The pricing on the $60 million private placement Lexar Media, Inc. priced Wednesday was "solid," according to one sell-sider.

"It will be good for them," said one market source. "[The conversion price] is at a 30% premium."

Even so, Lexar's stock closed down $0.11 at $5.03 Wednesday, a dip the market source contributed to the results of a recent lawsuit in which Lexar was involved.

Highbridge International LLC and Amphora Ltd. bought the senior convertible notes from Lexar.

The notes bear interest at 5.625%, mature April 1, 2010 and are convertible into common shares at $6.68 each.

The investors also have the option to buy up to $10 million in additional principal at the same price on or before the 60th day after closing.

Based in Fremont, Calif., Lexar develops digital media and accessories for digital photography and consumer electronics. It plans to use the proceeds for working capital, including the repayment of debt, and for general corporate purposes.

Kensington to price C$35 million deal

Kensington Resources Ltd. announced its intentions to raise C$35 million in a private placement.

The company will raise C$5 million from flow-through common shares and C$30 million from non flow-through units.

The units include one share and one half-share warrant. The full warrants allow for an additional share for one year.

Even though the pricing of the offering hasn't been determined yet, one sell-sider in Canada said he expected the deal to price well.

"With mining stocks in general up, I think it will do okay," the source said. "Kensington itself is in the middle of some restructuring, but I think the pricing will be pretty good just because of the sector in general."

The source refused to comment on where he felt the deal might price.

Loewen, Ondaatje, McCutcheon Ltd. will lead an underwriting syndicate for the offering.

Based in Vancouver, B.C., Kensington is a diamond exploration company. It plans to use the proceeds from the flow-through shares for exploration expenses on its Fort a la Corne project. The units will be used for exploration and for general corporate purposes.

On Wednesday, Kensington's stock closed down C$0.21 at C$2.16.

Tengtu wraps $3.9 million offering

Tengtu International Corp. has raised $3,906,117 in a private placement.

The company sold 1,887,943 units at $2.08 each to individual and institutional investors.

Each unit includes one share of series A convertible cumulative preferred stock, redeemable warrants for 10 shares at $0.40 each for three years and redeemable warrants for five shares at $0.60 each for three years.

Each preferred share pays annual dividends of 8% and is convertible into 10 common shares at $0.208 each.

"With this financing in place, we have strengthened our balance sheet, and now have sufficient funding to support our expansion plans, as we move towards cash-flow breakeven," said Penghui Liu, Tengtu's chief executive officer, in a statement.

"As a result of this funding, we look forward to launching the National Education Portal, which we believe will enable us to penetrate the sizable and lucrative urban school and household market. Moreover, I am extremely confident in the outlook for the core business given our recent success in the Western Rural Project, as well as our expanding sales of the Education Resource for Microsoft Office."

Based in Toronto, Tengtu produces education software and distance learning products in China. The proceeds will be used to retire outstanding liabilities and for working capital.

The company's stock closed up $0.04 at $0.25 Wednesday.

BrazAlta plans C$1.5 million deal

BrazAlta Resources Corp. said it will raise C$1.5 million in a private placement.

The company plans to sell up to 4,285,715 shares at C$0.35 each.

"It looks like it's just about in line," said one Canadian sell-sider who had seen the deal. "The stock seems to be responding positively, so I'd say it's a good deal for them."

After the deal was announced Wednesday morning, BrazAlta's stock closed up C$0.05 at C$0.435.

Octagon Capital Corp. is the placement agent in the offering.

Based in Calgary, Alta., BrazAlta is an oil and natural gas company with operations in Canada and Northern Ireland.

First Potomac's stock still up

A day after announcing the closing of a $44,997,500 direct placement, First Potomac Realty Trust's stock continued to rise.

The company's stock closed up $0.82 at $22.99. On Tuesday, when the closing was announced, the company's stock rose $0.12 to close at $22.17.

The company plans to sell shares at $21.95 each to RREEF America, LLC.

Based in Bethesda, Md., First Potomac develops, acquires and operates industrial properties.

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