Seaway gets investment; China Biologic to issue converts; Functional revises placement terms

By Stephanie N. Rotondo

Portland, Ore., June 8 - The medical and mining sectors continued to dominate the private placement market Monday, though it was Seaway Valley Capital Corp. that brought one of the day's larger deals.

Seaway, a New York-based investment company, said it was planning to take in $20 million via an equity financing agreement. The deal will include stock, but no other details were available as of press time.

In the medical arena, China Biologic Products Inc. said it would sell convertible notes in its quest to raise $9.55 million. Proceeds will be used to fund recent acquisitions.

Also, Functional Technologies Corp. gave an update on its private placement first announced in April. The deal was repriced, though the company did not give a reason for the change.

Yalian Steel Corp. is aiming for proceeds of C$8.5 million in its private stock sale. The one investor participating in the underwritten offering will also receive broker warrants.

Calibre Mining Corp. is also looking to raise C$8 million. Funds will be used for the company's interest acquisition of Yamana's NEN Project.

Seaway gets $20 million investment

Gouverneur, N.Y.-based Seaway Valley Capital announced that it entered into a $20 million equity financing agreement with Auctus Private Equity Fund LLC.

Thomas Scozzafava, the company's chief executive, told Prospect News that the deal would include stock but no warrants. Pricing and timing is dependant upon the company's registration statement being approved by the Securities and Exchange Commission, he said.

Also, Scozzafava said that Seaway was "unlikely to submit just one registration for the $20 million, it is likely to be done in a series of registrations." However, he added, there was no way to tell at the current time.

"This funding commitment has come at a crucial time for Seaway and its operating subsidiaries," Scozzafava said in a press release announcing the funding agreement. "Proceeds from this funding will be used to repay debt - both vendor payables and bank loans at the company's subsidiaries as well as convertible securities at the parent. After debt and vendor payable reductions, particularly at Hackett's Stores, Inc., we will look to utilize the funds for selective expansion opportunities at Hackett's, capital equipment additions at Alteri Bakery, Inc., and production and marketing funds for Sackets Harbor Brewing Company.

"At the parent company level our goal is to eliminate or reposition as much of the more expensive convertible debt, and some of these proceeds will be used to eliminate as much of that as possible," he added in the statement. "What is especially attractive is if Seaway can achieve a higher per share stock price, fewer shares of the offering would be needed to fund the company for any given dollar amount, and those dollars can be used to repay the more dilutive floating rate convertible debt.

"This funding, combined with ongoing debt restructurings, will allow Seaway to consolidate its capital structure, stabilize its portfolio companies and position them for continued growth. Management will work diligently to get the transaction registered in a timely manner," Scozzafava concluded.

Seaway's shares (OTCBB: SWVL) dropped $0.0030, or 27.27%, to $0.0080.

Seaway Valley Capital is a diversified holding company.

China Biologic to issue converts

China Biologic Products entered into an agreement to sell 3.8% senior secured convertible notes due 2011 to an investor group led by Essence International Investment Ltd., according to a press release.

The company plans to raise approximately $9.55 million via the private placement. The notes are convertible into common stock at a conversion price of $4.00 per share.

Also, warrants for an additional 1.19 million shares will be issued. Each warrant is exercisable at $4.80 per share.

Proceeds from the notes sale will be used to fund part of China Biologic's recent interest acquisitions in Xi'an Huitian Blood Products Co., Ltd. and Chongqing Dalin Biologic Technologies Co., Ltd.

"This private placement financing provides us with sufficient working capital as we integrate our two recent acquisitions into our existing operations," said Chao Ming Zhao, chief executive officer of China Biologic Products, in a statement. "Going forward, we anticipate that the cash flows generated by these acquisitions will provide a solid financial basis for our future growth. Furthermore, we believe that our new investors are highly experienced in the health care industry, will provide us with valuable insight as we increase the scale of our business."

China Biologic's equity (OTCBB: CBPO) fell 21 cents, or 4.82%, to $4.15.

China Biologic Products is a Taian City, China-based plasma-based pharmaceutical company.

Functional revises placement terms

Functional Technologies revised the terms of a private placement originally announced April 14, the company said in a news release.

Under the new terms of the deal, the company will issue 8.75 million units at C$0.40 per unit for total proceeds of C$3.5 million. The deal contains an over-allotment option of C$5 million, or 3.75 million units.

Each unit will hold one common share and one warrant good for one common share. The exercise price of each warrant is C$0.80 for two years.

According to the original terms, only 7.8 million units were to be sold, at C$0.45 per unit. The over-allotment included 3.3 million additional units.

Also, each unit held only one common share and one half-share warrant, with an exercise price of C$0.60 for 18 months.

Proceeds "will be used primarily for the purchase of equipment and related labor required for the completion of initial manufacturing capability at the company's P.E.I. facilities, as well as for the commercialization of recently announced new technology, for ongoing R&D and general working capital," according to the release published on April 14.

Settlement is expected by June 18.

Calls made to the company seeking comment went unreturned Monday.

Functional's stock (TSX Venture: FEB) ended unchanged at C$0.48, where it last traded on June 5.

Functional Technologies is a Vancouver, B.C.-based developer of functional foods and biological health products.

Yalian, Calibre announce deals

Vancouver, B.C.-based mining company Yalian Steel arranged a C$8.5 million private placement of equity, the company announced.

Yalian will sell 5 million common shares at C$1.70 per share to GMP Securities LP. GMP will also receive warrants for 6% of the number of shares issued in the bought deal.

The warrants expire 18 months after the closing date of the offering. Settlement is expected by June 19.

Proceeds will be used for general working capital.

Yalian's stock (TSX Venture: YL) gained a nickel, or 2.56%, to C$2.00.

Also in the mining sector, Calibre Mining priced its subscription receipts offering, announced May 26, according to a press release.

The company plans to take in C$8 million in the deal. Each receipt will sell at C$0.18 and is convertible into one unit. Each unit consists of one common share and one half-share warrant.

Each whole warrant is exercisable at C$0.25 for the first year and at C$0.30 for the second.

Also, the receipts are automatically convertible once the company completes its acquisition of Yamana's NEN Project.

The deal also includes a C$2 million greenshoe.

Proceeds will be used for the acquisition of the NEN Project, as well as for exploration and drilling.

Calibre's equity (TSX Venture: CXB) fell C$0.005, or 2.63%, to C$0.185.

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