Neostem, Neuralstem wrap offerings; Spectrum to sell units; Freedom4 aims for £83 million deal

By Stephanie N. Rotondo

Portland, Ore., July 1 - The medical and technology sectors took over the private placement market Wednesday and several companies announced completed deals.

In the medical arena, both Neostem Inc. and Neuralstem Inc. said they settled transactions. Neostem closed on a $4 million tranche, bringing its total proceeds to $15 million, while Neuralstem raised $1 million in a direct offering.

Meanwhile, Spectrum Pharmaceuticals Inc. announced a $21 million direct offering. The new deal comes just two weeks after the company completed a $10 million direct offering.

In the technology sphere, Freedom4 Group plc said it would sell stock to raise £83 million. Freedom4 plans to use the funds for two planned acquisitions, as well as any potential buys.

Also, Access Intelligence plc received £1.75 million from its convertible loan notes sale. Access will also use proceeds for acquisitions.

Among other issuers coming to market, Gold Resource Corp. said it aimed to bring in $20 million to finance its El Aguila project.

Neostem settles unit sale

Neostem closed on a $4 million tranche of units, according to a press release.

The New York-based company sold the units at $12.50 per unit. Each unit held one series D convertible redeemable preferred stock and 10 warrants. The warrants were automatically convertible into common shares at $2.50 for five years.

In total, the company has raised $15 million by issuing the units. Neostem had previously raised $11 million in a deal that settled April 13.

"We are very pleased to receive this additional investment from a group of institutional and private onshore investors who recognize the many recent achievements of NeoStem under our multi-faceted business plan," commented Robin Smith, chairman and chief executive officer, in the release.

"Our growing stem cell technology base and our expanding relationships with key business partners in the U.S. and China open the way to new markets, distribution channels and production capabilities in the world's two largest economies. By successfully leveraging both the medical and commercial potential of emerging adult stem cell therapies, NeoStem is establishing an international leadership position in this rapidly developing field."

"We are also excited that the principals of Suzhou Erye have made a second investment in our future, which we believe solidifies their commitment to our post-merger endeavors," she added.

Neostem's stock (Amex: NBS) gained 20 cents, or 10.53%, to $2.10. Market capitalization is $17.2 million.

Neostem collects, processes and stores stem cells for autologous use in the treatment of cardiac disease, autoimmune disorders and other conditions.

Neuralstem wraps offering

Among other stem cell-related companies, Neuralstem said it settled a $1 million registered direct offering of equity and warrants.

Under the terms of the deal, Vicis Capital Master Fund purchased 800,000 common shares at $1.25 per share. Vicis also received warrants equal to 2.4 million common shares at a strike price of $1.25. A third of the warrants must be exercised within the year, another third in the second year and the final portion in the third year.

"These funds will help to support the development of our stem cell technology including the pre-clinical work at the China Medical University & Hospital of Taiwan on stroke," said Richard Garr, president and CEO of Neuralstem, in a statement. "We appreciate Vicis' show of commitment to our vision and business model."

"We are very excited to complete this transaction as we believe this is a strong investment for our portfolio," added Chris Phillips, managing director of Vicis Capital. "We are confident in the company's leadership position to treat neurodegenerative conditions and injury with its cells."

Neuralstem's equity (Amex: CUR) increased a dime, or 9.52%, to $1.14. Market capitalization is $37.1 million.

Neuralstem is a Rockville, Md.-based developer of technologies to transplant human neural stem cells.

Spectrum to issue units

Elsewhere in the medical arena, Spectrum Pharmaceuticals arranged a $21 million registered direct offering of equity units, the company announced.

The company will issue approximately 2.94 million common shares, along with warrants good for another approximately 1.47 million additional shares. Each unit will consist of one common share and one half-share warrant and will sell at $7.1525 per unit. Each whole warrant is exercisable at $7.10 for 90 days.

Proceeds will be used for general corporate purposes. Settlement is expected by July 6.

The transaction comes a few weeks after the company sold common share units to raise $10 million. That deal closed June 19.

Spectrum's shares (Nasdaq: SPPI) fell $1.01, or 13.20%, to $6.64. Market capitalization is $229 million.

Spectrum Pharmaceuticals is an Irvine, Calif.-based developer of cancer drugs.

Freedom4 aims for acquisition financing

Freedom4 Group plans to raise £83 million via a private placement of ordinary stock.

About 103.75 million shares will be sold at 80p per share.

Funds raised will be used to fund the acquisition of Daisy, an SME value-added reseller, for £30 million in cash, as well as the acquisition of Vialtus for £13 million in cash. The remaining funds might also be used for other acquisitions.

Upon completion of the deals, Freedom4 Group's market capitalization will be approximately £204.4 million.

"We are seeing an opportunity in the U.K. telecoms services market at the moment where the fragmented nature and depressed valuations in the sector create conditions which are well-suited for generating value through consolidation," said Peter Dubens, non-executive chairman of Freedom4 Group, in a press release. "Our experience in making carefully chosen acquisitions and integrating them properly gives us confidence in our ability to generate further value for our shareholders. One of the major strengths of Daisy is the unified brand and operating system which will be key to the group's future success."

"Over the last eight years, Daisy has grown to be a substantial provider of cost-effective communications services, with over 30,000 SME customers," added Matthew Riley, CEO of Daisy and future CEO of Freedom4. "With 24 acquisitions during this time, the management at Daisy has honed its consolidation and integration skills, maintaining customer service levels and creating a truly scalable operational platform.

"Daisy and Vialtus are two highly synergistic businesses; we believe that together they will be able to provide SME and mid-market customers with an effective and attractive one-stop-shop offer, and provide us with the solid foundations for our plans for future growth," Riley concluded.

Freedom4's stock (London: FFG) closed at 4.02p. Market capitalization is £22.2 million.

Freedom4 Group is an Uxbridge, England-based telecommunications services provider.

Access sells loan notes

York, England-based Access Intelligence said it took in £1.75 million in a private placement of 6% convertible loan notes.

The notes - valued at 100p - come due June 30, 2014 and are convertible at 4p per share. The notes may be redeemed after 18 months at a 10% premium.

Elderstreet VCT plc purchased 500,000 of the notes, while Unicorn VCT plc bought 750,000.

Funds will be used to partially fund Access' acquisition of Ether-Ray, Ltd., an online on-demand marketing communications company.

The full price of the acquisition is £2.413 million, subject to certain adjustments.

"Ether-Ray is one of the market leaders in this public sector niche, servicing around 25% of local authorities and counting universities, NHS organizations, police authorities, charities and government agencies among their clients," said Michael Jackson, Access Intelligence's executive chairman, in a statement.

"Ether-Ray has a strong team with specialist knowledge in these sectors. The acquisition is in line with our plans to focus Access Intelligence on SaaS. Ether-Ray has good synergies with our existing businesses and we see a number of significant cross-selling and up-selling opportunities with other companies within the Access Intelligence group of companies," Jackson said.

"Our product portfolio offers a strong bedrock on which to build a dynamic and competitive SaaS proposition, which we believe provides us with growing revenues and increasing visibility."

Access' equity (London: ACC) ended at 4.16p. Market capitalization is £6.98 million.

Access Intelligence is a software and computer services company.

Gold Resource raises funds for project

Gold Resource, a Denver-based gold and silver exploration company, said it would raise $20 million by privately placing stock.

The deal will come in two tranches, the first of which closed on June 30 for proceeds of $5 million. The remaining $15 million is expected to settle by July 20.

The company will sell 5 million restricted common shares at $4.00 per share to Hochschild Mining plc.

Proceeds will go toward funding the El Aguila project in Oaxaca, Mexico.

"The Aguila Project is targeting production upon completing construction of the mill and upon receiving its final permit to mine from its high-grade open pit deposit," according to a press release. "Though the granting of the last operating permit has taken longer than GRC would have liked the company has been given no indication at this point that there is any problem with its open pit permit application and management is optimistic the permit will be granted soon."

"We are pleased to have the continued support and financial assistance of Hochschild Mining during these final phases of project construction," said William W. Reid, president. "Hochschild has and is assisting us in many ways, in addition to financial support, which has been much appreciated and we look forward to their possible assistance in accelerating exploration of our large property position.

"We are very pleased with the construction progress of our Aguila Project," Reid added. "Mill construction continues with the final contractor, the mechanical/electrical contract, and with equipment arrival and installation. The tailings facility is nearing completion with over three quarters of the double lined facility finished. Overburden removal of the open pit continues at such a rapid pace that we have chosen to start the second phase of the tailings dam much sooner than originally planned. Our project manager and employees, as well as Lyntek Engineering and the construction contractors, are all doing an excellent job."

"We are delighted to announce this transaction which provides Hochschild further exposure to low cost, high grade ounces in the Southern Mexico, in line with our cluster consolidation strategy," said Miguel Aramburú, CEO of Hochschild, "We have been extremely impressed with the quality of GRC's assets and the speed at which the El Aguila property is being developed. This investment will enable GRC to complete the construction of the mine and plant as well as to further their exploration efforts."

Gold's stock (OTCBB: GORO) improved by 43 cents, or 10.29%, to $4.61. Market capitalization is $189 million.

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