MFRI pockets $20.165 million from direct stock deal; ECO2 Plastics raises $13 million

By Sheri Kasprzak

New York, Feb. 6 - Two companies in the industrial sector led PIPE news Tuesday. The largest offering came from MFRI, Inc. with a $20.165 million registered direct placement of stock and the other from ECO2 Plastics with a $13 million offering of convertible debentures.

In the MFRI offering, the company sold 1.09 million shares at $18.50 apiece to a group of institutional investors. The price per share is a 3.7% discount to the company's $19.21 closing stock price on Monday.

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

Lane Capital Markets, LLC was the placement agent.

Proceeds will be used for general corporate purposes.

The company's stock gave up 4.8%, or 92 cents, on Tuesday to settle at $18.29 (Nasdaq: MFRI).

Niles, Ill.-based MFRI makes industrial filtration products, specialty piping and leak detection systems.

In the broader market Tuesday, activity in the U.S. may have been reasonably muted but in Canada, volume continues to be strong.

"[Canadian] stocks are being pulled up by oil prices," said a sellside market source based in Vancouver, B.C. "A lot of resources companies are getting into the market because it's a good time to price. Their stocks are nice and healthy."

In fact, several resources offerings were priced Tuesday.

ECO2 raises $13 million

Moving back to the industrial sector, ECO2 Plastics, formerly ITEC Environmental Group, Inc., closed a private placement of convertible debentures with a group of investors that included Roaring Fork Capital SBIC, LP.

The $13 million in debentures were sold in units of $25,000 in principal and warrants for 75,000 common shares. A total of 520 units were sold.

The 10% 18-month debentures are convertible into common shares at $0.0975 each.

The warrants are exercisable for 10 years at $0.06 each.

"With its unique technology, strong management team, compelling business model and commitment to revolutionizing recycling, ECO2 Plastics is an outstanding addition to Roaring Fork's portfolio of investments," said Eugene McColley, managing partner of Roaring Fork, in a statement. "We see tremendous potential for ECO2 Plastics and are excited to play an important role through its next stage of growth."

ECO2's stock gained 2 cents, of 7.14%, to end at $0.30 Tuesday (OTCBB: ITEC).

Based in Riverbank, Calif., ITEC is moving into the business of cleaning recyclable plastic products without water and distributing the cleaned products.

China Pharma's $4.26 million deal

Looking to the biotech sector, China Pharma Holdings, Inc. sealed a $4.26 million private placement.

News of the offering sent the company's stock plummeting 14.86%, or 33 cents, to round out the day at $1.89 (OTCBB: CPHI).

The company issued 2,505,882 shares at $1.70 each.

The investors also received class A warrants to purchase 1,252,941 shares. The warrants are exercisable at $2.38 each for three years.

Sterne, Agee & Leach, Inc. was the placement agent.

Proceeds will be used for the development of new drugs in the company's pipeline and for working capital.

"This financing allows us to further the development of our new drugs at clinical trial stage and provides the company with additional working capital to support the launch of several new drugs we have recently introduced into the market," said Zhi-lin Li, the company's chief executive officer, in a news release. "This transaction benefits both our customers and shareholders by expediting our progress of new drug development programs and strengthening our financial position."

Located in Haikou City, China, China Pharma develops Western and Chinese medicines to treat infections, hepatitis, vascular diseases and other diseases.

Cell Genesys stock slips

A day after announcing it had received a $75 million equity line from Kingsbridge Capital Ltd., Cell Genesys, Inc.'s stock dipped Tuesday.

The company's stock gave up 2.46%, or 8 cents, to end the day at $3.17 and lost another 2 cents in after-hours trading (Nasdaq: CEGE).

The stock climbed by 2 cents on Monday when the equity line was announced to close at $3.25.

Under the equity line terms, Kingsbridge may buy shares at discounts ranging from 6% to 10% depending upon the market price during an eight-day pricing period.

Proceeds will be used for research and development as well as general corporate purposes.

Based in South San Francisco, Calif., Cell Genesys develops and commercializes treatments for cancer.

Stratic prices C$50 million placement

Heading to Canadian offerings, Stratic Energy Corp. negotiated the terms of a C$50 million private placement as part of its merger with Grove Energy Ltd.

The deal includes up to 37,037,037 shares at C$1.35 each and is being offered through a syndicate of underwriters led by GMP Securities LP.

Half of the shares are being sold as subscription receipts until the merger is completed.

Proceeds will be used for the development of the combined companies' oil and natural gas projects.

The deal is set to close March 6.

Under the merger terms, Stratic will buy all of the outstanding shares of Grove on the basis of 0.61879 shares of Stratic for each Grove share.

The company's stock slipped 6 cents Tuesday to settle at C$1.38 (TSX Venture: SE).

Stratic is an oil and natural gas company based in Calgary, Alta.

Mega plans PIPE

In other Canadian offerings, Mega Uranium Ltd. priced a C$30.627 million private placement of flow-through shares and units of one share and one half-share warrant.

The offering includes up to 1.4 million shares at C$7.38 each and up to 3.3 million units at C$6.15 each.

Each whole warrant associated with the units is exercisable at C$7.90 each for five years.

A syndicate of underwriters led by Westwind Partners Inc. has a greenshoe for up to 200,000 additional flow-through shares and up to 500,000 additional units.

The flow-through portion of the deal is set to close March 6 and the unit portion on Feb. 21.

Proceeds from the flow-through shares will be used for Canadian exploration expenses and the proceeds from the units for the development of current projects and for working capital.

Mega's stock gave up 6 cents Tuesday to close at C$6.14 (Toronto: MGA).

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

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