Private placement volume improves slightly on better stocks; Southwest Casino raises $50 million

By Sheri Kasprzak

Atlanta, Jan. 28 - As stocks made small gains Friday, the private placement market ended the week on a slightly better note.

"Issuers have been waiting, undoubtedly, for stocks to improve," said one sell-side source. "I think things were a bit better today in terms of volume."

The Dow Jones Industrial Average ended the week up 0.74 to close at 10,468.14; the Nasdaq composite index edged up 2.86 to end at 2,050.01 and the S&P 500 gained 0.07 to finish at 1,174.62.

In Canada, however, volume continued to stagnate, sources said. Oil dropped on Friday, pulling down energy stocks, according to one market source in Canada. Oil and gas companies make up a large chunk of the private placement offerings in Canada, the source said.

Oil lost $1.69 Friday to close at $47.15 per barrel.

Heading up action in the United States, Southwest Casino Corp. reported its plans to raise up to $50 million in a private placement.

The company intends to sell up to 83,333,333 shares at $0.60 each to the Graves Group and other investors.

The Graves Group will receive warrants for 20 million shares. The warrants are exercisable at $1.70 each for five years.

Graves has the right to buy another 2 million shares at $5 each for the next five years.

In other news, Southwest agreed to pay an additional 1.17 million shares at $1.70 each to acquire the assets of AcesWiredLLC, a company owned by Graves.

Minneapolis-based Southwest develops, owns, operates and manages casinos, gaming facilities and related amenities.

On Friday, Southwest's stock closed unchanged at $2.15.

Vasogen closes direct offering

In the fourth direct placement of the week, Vasogen Inc. said it plans to receive $42.3 million from a direct placement.

The offering includes 9 million shares at $4.70 each sold to institutional investors.

The shares will be offered through the company's shelf registration.

"This deal is a bit off," said one market source. "Vasogen suffered some major losses in 2004, and that has a significant impact on its stock, which, in turn, had a significant impact on the pricing of this deal."

According to Vasogen's earnings statement, the company lost $74.6 million in fiscal year 2004.

Some market sources have said that direct placements often allow issuers to get better pricing.

SG Cowen & Co., LLC was the lead placement agent in the deal.

Based in Mississauga, Ont., Vasogen researches and develops technologies to treat chronic inflammation from cardiovascular and neurological disorders. The proceeds from the private placement will be used to fund the ongoing development of its Celacade technology and to fund its drug development pipeline. The remainder will be used for general corporate purposes.

Vasogen's stock closed down $0.15 at $4.99 Friday.

Applied DNA wraps deal

Applied DNA Sciences, Inc. finished a private placement for $5.97 million, the company said.

The company sold secured convertible promissory notes, which bear interest at 10% annually and mature in one year.

The notes are convertible into common shares at $0.50 each.

The investor also received warrants for 5.97 million shares at $0.75 each for five years.

Vertical Capital Partners, Inc. was the placement agent in the offering.

Based in Los Angeles, Applied DNA Sciences develops DNA-encoded products to determine genuine articles from counterfeits.

On Friday, Applied DNA's stock closed down $0.13 at $1.32.

International Fuel raises $5 million

International Fuel Technology Inc. plans to rake in $5 million from a non-brokered offering.

The company said it sold 2.5 million shares at $2 each to Jasopt Property Ltd.

The investor also has the option to buy an additional 250,000 shares at $2 each for five years.

International Fuel, based in St. Louis, develops fuel additives to reduce emissions from internal combustion engines.

The company's stock closed down $0.13 at $2.36 on Friday.

Business Bank reprices deal

Business Bank of Nevada re-priced its previously announced $5 million private placement because of strong demand.

The offering is now comprised of 142,857 shares at $35.00 each instead of the 192,307 shares at $26 each originally announced.

Hoefer & Arnett was the company's financial adviser in the deal.

"The investor interest in our initial private placement has caused the board of directors to make a prudent business decision to reissue this offering at a per-share price that is at a premium versus its appraised value," said the company's president and chief executive officer John Guedry in a statement.

"This level of interest in the company's stock reflects positively on the efforts of the board and management to make our company the premier business bank in Nevada and help us raise the additional capital we need to fund our future growth plans."

Based in Las Vegas, Business Bank of Nevada is a bank holding company. The proceeds from the private placement will be used to advance the company's growth and fund investments in loans and securities.

The company's stock closed up $0.50 at $35.75 on Friday.

Modern Technology to raise $3.5 million

Modern Technology Corp. said it is preparing to close a $3.5 million private placement of notes and preferred stock.

The company has received agreements for $2 million in 8% senior secured convertible redeemable notes and $1.5 million in series A preferred stock.

The investors also received warrants for 3 million shares.

Modern Technology's chief executive officer Anthony Welch refused to comment on the other details of the offering, referring instead to the form 8-K the company will be filing with the Securities and Exchange Commission.

"We chose the private placement route because it allows us the greatest flexibility with our transactions on reasonable terms and timelines," Welch said in an interview Friday.

"The structure and terms are consistent with our desire to continue building shareholder equity. Our strategy is growth through acquisition and subsequent sector expansion. We cannot achieve that goal without flexible investments on reasonable terms."

Based in Oxford, Miss., Modern Technology is a business development and acquisition company that provides business infrastructure, intellectual capital, investments and market and revenue expansion services.

The proceeds will be used for the completion of the company's acquisition of Sound City Corp. and for working capital. The company used $1.5 million from the offering to buy a $1.5 million convertible debenture from DeMarco Energy Systems of America Inc.

On Friday, the company's stock closed up $0.04 at $0.31.

YTB raises $2 million

YTB International, Inc. said it closed a $2 million private placement Friday.

The company sold to Laurus Master Fund Ltd. a secured convertible note to Laurus Master Fund Ltd. The three-year note bears interest at Prime plus 300 basis points.

The note is convertible into common shares at $0.80 for the first million and $1.25 for the second million shares.

Laurus also received a warrant for 400,000 shares at $1.58 each and 400,000 shares at $1.72 each exercisable for seven years.

"Laurus Funds' capital commitment will provide the opportunity to advance our growth objectives," said YTB's chief executive officer Michael Brent in a statement. "And we look forward to a long and mutually rewarding relationship with Laurus."

Based in Englewood Cliffs, N.J., YTB is a referral marketing and travel company. It plans to use the proceeds from the private placement for growth.

The company's stock closed unchanged at $1.30 on Friday.

Trend closes deal

Trend Mining Co. said it completed a private placement of secured convertible promissory notes for $1.3 million.

The 10% notes mature in three years.

The notes are convertible into common shares at $0.30 each.

The closing is in addition to a first closing for $250,000 on Dec. 8, for a total of $1.55 million. The company had initially planned to raise $2 million.

Trend, a Denver-based precious-metals exploration company, plans to use the proceeds to pay off existing trade accounts payable and to fund exploration work on its mineral projects in North America.

On Friday, Trend's stock closed unchanged at $0.27.

Innovision plans £5.22 million offering

Innovision Research & Technology plc will head to the private placement market with a £5.22 million offering of shares.

The company plans to sell 5.8 million shares at 90p each to institutional investors.

The shares are priced at a 12.2% discount to the mid-market price of 102.5p per share at close of market on Jan. 27.

Based in Wokingham, England, Innovision develops radio frequency identification chips. The company plans to use the proceeds from the private placement to secure new customers, exploit and grow its intellectual property portfolio and improve its technical capabilities.

Innovision's stock closed up 13p at 115.5p on Friday.

Leader upsizes offering

Heading news in Canada, Leader Energy Services Ltd. said it has increased the size of its previously announced C$5 million private placement to C$7.25 million.

The company now plans to sell 5.8 million units at C$1.25 each. The units include one share and one half-share warrant.

The whole warrants allow for an additional share at C$1.70 each for two years.

Research Capital Corp. is the placement agent in the deal and has an over-allotment option of 15% of the number of units sold, exercisable for 60 days after closing.

Based in Calgary, Alta., Leader provides field services for oil and gas well stimulation. The company plans to use the proceeds from the offering for the purchase of one deep-coiled tubing unit, two nitrogen pumper units, two nitrogen bulker units and for working capital.

Leader's stock closed unchanged at C$1.60 on Friday.

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