Oil companies may return to PIPE market following OPEC meeting; Secured Services raises $7 million

By Sheri Kasprzak

Atlanta, June 15 - Oil exploration companies may return to the private placement market, sell-siders said, in light of gains in oil prices Wednesday and word from the Organization for Petroleum Exporting Countries that it may increase production later this year.

One sell-sider in Canada said OPEC's announcement will likely not affect oil production that much, but the news itself may encourage more deals in the PIPE market.

"It really doesn't matter that the chance of increased production, at least on the level they're talking, may not happen this year," the sell-sider said. "The impact the news has and will have on prices will probably mean more [PIPE] deals."

New offerings from oil companies have been scarce this week, given shaky oil prices just ahead of OPEC's meeting on Wednesday.

Another sell-sider in San Francisco said he feels U.S.-based energy companies could respond to the news as well.

"Whatever the circumstances, once oil prices go up enough, you can usually expect to see the sector put out some offerings," said the source. "I don't think this is any different. I'd expect to see some things in the coming days. The effect may not be immediate, but we may see some offerings trickle in."

Oil prices gained $0.57 to close at $55.57 per barrel Wednesday.

On the subject of sectors returning to the market, mineral exploration companies got back into the action Wednesday after stocks in that sector took a downward turn earlier in the week.

Among the mineral companies in the market Wednesday were Indicator Minerals Inc. with a C$2 million offering, Mansfield Minerals Inc. with a C$1.4 million deal and Roca Mines Ltd. with a C$1.05 million offering.

In the broader market, despite gains in all of the major stock indexes, volume remained reasonably low, sell-sider said.

"Same story, different day," one market source joked. "We're just waiting for some gain of real significance."

The Dow Jones Industrial Average, helped by inflation-friendly indicators in the Federal Reserve's Beige Book report but held back by the gains in oil, closed up 18.8 to close at 10,566.37; the Nasdaq composite index gained 5.88 to close at 2,074.92 and the S&P 500 edged up 2.67 to close at 1,206.58.

Secured Services sells $7 million

Moving to the technology sector, Secured Services Inc. led private placement news with word that it wrapped a convertible debenture offering for $7 million.

The debentures mature on June 13, 2008, bear interest at 7.5% annually and are convertible into a total of 5,837,146 common shares.

The company has received $4 million of the proceeds so far and the remainder will be received once Secured meets certain conditions.

The investors will also receive warrants equal to 40% of the shares available upon conversion, exercisable at $1.28 each for four years.

Merriman Curhan Ford & Co. was the placement agent.

The company also announced that it has completed its acquisition of Chameleon Communications Technology, Inc.

Based in New York, Secured Services is a software company focused on identity and access-management security products.

The company's stock closed unchanged at $1.03 Wednesday.

Diamondex wraps C$4.2 million deal

Heading to the natural resources sector, Vancouver, B.C.-based Diamondex Resources Ltd., one of several diamond exploration companies in the market this week, wrapped a C$4,185,000 offering.

The company issued 3 million flow-through common shares at C$1.05 each and 1.15 million units at C$0.90 each.

The units include one share and one warrant. The warrants are exercisable at C$1.25 each through June 14, 2007.

"Diamonds have really surged this week, that's why there are so many [deals]," said one market source familiar with natural resources. "I'd say this one looks okay. It's seems right in line to me. I fully expect more diamond offerings coming up, just because there is investor interest."

Diamondex said it plans to use the proceeds for exploration expenses on its Canadian projects and general corporate purposes.

On Wednesday, Diamondex's stock lost $0.03, or 3%, to close at C$0.97.

Tahera Diamond Corp., another diamond exploration company, announced its plans to head to the private placement market with a C$3.41 million offering. Tahera's stock gained C$0.015 Wednesday to close at C$0.405.

Lithium plans to raise $2.5 million

A leftover from the recent surge of tech and biotech deals in the PIPE market, Lithium Technology Corp. announced its $2.5 million convertible debenture offering Wednesday.

The company has already secured $1.2 million from the deal and expects to raise the remaining $1.3 million before August 9.

The two-year debentures bear interest at 12% annually and are convertible into common shares at $0.05 each beginning December 9.

Based in Plymouth Meeting, Pa., Lithium produces lithium batteries for cell phones and notebook computers.

Lithium's stock dropped $0.012, or 15.79%, to close at $0.064 Wednesday.

Comprehensive Care's stock rises

A day after closing a $3.6 million private placement, Comprehensive Care Corp.'s stock made gains.

The company's stock rose $0.13, or 8.13%, to close at $1.73 Wednesday after wrapping up unchanged at $1.60 Tuesday when the closing was first announced.

Tampa, Fla.-based Comprehensive sold preferred shares at $250 each to a single institutional investor. The preferreds are convertible into common shares on the basis of 294.12 common shares for each preferred share.

Comprehensive Care is a behavioral health, substance abuse and employee assistance program provider for governmental agencies, managed-care companies and employer groups.

Holly Energy's stock makes gains

Holly Energy Partners LP's stock made a comeback Wednesday after dipping Tuesday on word that the company plans to raise up to $35 million in a private placement.

The company's stock rose $0.73 to close at $43.53 Wednesday.

On Tuesday, the company's stock slipped $0.60, or 1.38%, to close at $42.80 Tuesday.

After the deal was first announced Monday, the company's stock gained $0.50, or 1.17%, to close at $43.40.

Holly Energy sold shares to institutional investors as $29.166, a 33% discount to its closing stock price on Monday.

Dallas-based Holly Energy provides refined petroleum product transportation and terminal services.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.