U.S. private placement volume improves on higher stocks; ArQule raises $31 million in direct placement

By Sheri Kasprzak

Atlanta, Jan. 25 - Private placement volume in the United States improved Tuesday as the stock market made gains after several days of declines.

"Volume was actually pretty good today for a change," said one market source.

"At the beginning of the year, issuers really didn't have a need to raise money. And over the past few weeks, stocks have looked bad so this is really the first opportunity issuers who are looking to arrange deals have been able to do so without resorting to incredibly high discounts."

Oil prices, which had seen gains for the past two weeks, dropped $0.21 to $48.60 per barrel on Tuesday, helping the depressed stock market.

The lower oil prices, however, hurt volume in Canada.

"There's really not much out there today," said one Canadian market source. "Mostly smaller deals, under C$1 million. Oil is down, so that has affected issuance somewhat."

Heading up action in the United States was a direct placement from ArQule Inc.

The company sold 5,904,762 shares at $5.25 each, sold under the company's shelf registration.

The deal is scheduled to close Jan. 28.

"Direct placements are becoming more popular," said one market source. "This particular one seems like it's priced in line. Of course, this company also suffered some serious losses in its stock recently. Direct placements are being done because issuers can negotiate better pricing. There are still discounts, but the discounts are a lot smaller."

JP Morgan Securities Inc. was the placement agent in the offering.

Based in Woburn, Mass., ArQule is a biotechnology company focused on research and development in cancer therapeutics.

On Tuesday, ArQule's stock closed unchanged at $5.61.

GTC closes $10.4 million offering

Elsewhere in direct placements, GTC Biotherapeutics Inc. closed a $10,395,000 offering.

The company sold 7.7 million shares at $1.35 each under its shelf registration.

SG Cowen & Co. LLC was the placement agent.

Based in Framingham, Mass., GTC develops, produces and commercializes therapeutic proteins through transgenic animal technology. The company will use the proceeds for general corporate purposes, including the support of its clinical and regulatory strategy for product development.

The company's stock closed up $0.02 at $1.49 on Tuesday.

Business Bank of Nevada's offering

Business Bank of Nevada will head to the private placement market with a $5 million offering, the company said.

The offering includes 192,307 shares at $26 each.

The company has geared the deal toward investors in Nevada who hole at least 5,000 shares of the company. There is a minimum subscription requirement of 1,925 shares.

"We are very excited about our private placement and the additional capital we anticipate raising from this offering," said John Guedry, the president and chief executive officer of Business Bank of Nevada, in a statement. "With the capital we raise from this offering, along with the capital we've already raised from the trust preferred securities [raised in the fourth quarter of 2004], we should have sufficient capital to fund our growth plans for the next three to four years."

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 Tuesday.

Next plans $3 million deal

Next Inc. will hit the private placement market with a $3 million offering.

The offering includes 2.3 million shares at $1.30 each and will be sold to multiple institutional investors.

Dougherty & Co. is the placement agent in the deal.

"We're pleased to have grown the company to the next level in terms of how we are perceived by the capital markets," said the company's chief executive officer Bill Hensley in a statement. "The interest we received from new institutional investors validates our business plan. We're also very proud of having attracted the interest of a quality firm like Dougherty & Co. to help us facilitate future growth."

Based in Chattanooga, Tenn., Next designs, develop, markets and distributes licensed and branded promotional products and imprinted sportswear. The company plans to use the proceeds from the private placement for working capital and business opportunities related to its acquisition of Choice International.

Next's stock closed unchanged at $1.48 on Tuesday.

Beard closes $2.1 million deal

The Beard Co. has completed a $2.1 million private placement of convertible subordinated notes.

The notes were sold to a group of private investors and bear interest at 12% annually. The notes, which mature Feb. 15, 2010, are convertible into common shares at $1 each.

"It looks like a good deal to me," said one market source. "As I've mentioned before, anything related to coal or coal products is doing great right now. Coal is a very strong resource stock and we should continue to see strength in that market. As for this particular deal, the conversion price is at only a slight discount."

"Following the exchange, approximately $1,700,000 of net proceeds will be available to the company from the offering," said Beard's president Herb Mee said in a statement.

"We are excited about the profit potential the company has in its coal, China and e-commerce segments. The successful completion of this offering gives us the working capital we need to move forward with the opportunities available to us."

Based in Oklahoma City, The Beard Company is focused on coal reclamation activities, carbon dioxide gas production, the construction of fertilizer plants in China and developing business opportunities through its e-commerce activities. The company plans to use a portion of the proceeds for working capital and the remainder will be used for a pond fines recovery project in West Virginia.

Beard's stock closed up $0.05 at $1.40 Tuesday.

AB Watley wraps offering

AB Watley Group Inc. has raised $2 million in a private placement of 5 million shares at $0.40 each.

To date, AB Watley has received $1 million from the deal and expects to receive the remainder in quarterly installments through April 1.

The private placement is part of the company's debt-reduction plan. In fiscal year 2004, the company reduced its total liabilities and preferred stock by $13.5 million from $29.4 million to $15.9 million.

Among the methods used to reduce debt, holders of its series A redeemable convertible preferred stock exchanged the preferreds for warrants to buy 6,242,729 common shares at $0.01 each for seven years. Also, some of the company's note holders forgave notes in exchange for either warrants or shares. The company has also placed the exercise price for common shares received upon the exercise of warrants at $0.19.

AB Watley is a New York-based financial services holding company.

On Tuesday, the company's stock closed up $0.04 at $0.26.

Attunity receives agreements

Attunity Ltd. plans to receive $2 million in a private placement of stock.

The company will issue 727,272 shares at $2.75 each.

The investors will also receive warrants for 290,909 shares at $2.75 each for three years.

"Expanding our visibility in the U.S. institutional investment community is an important element of our corporate strategy and we are pleased to announce this transaction with a distinguished investment management firm," said the company's chief executive officer Aki Ratner in a statement.

Based in Wakefield, Mass., Attunity is a data-integration software company. It plans to use the proceeds from the offering for working capital and general corporate purposes.

The company's stock closed down $0.05 at $2.70 on Tuesday.

Oilexco plans £7 million deal

Oilexco Inc. announced its plans Tuesday to raise up to £7,000,500 in a private placement.

The offering includes up 5,385,000 shares at £1.30 each.

The shares will be sold to European institutional investors and is expected to close by Feb. 7.

The oil exploration and development company plans to use the proceeds from the offering for its 2005 U.K. North Sea drilling program.

Oilexco's stock closed down C$0.08 at C$3.07 Tuesday.

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