Ausam Energy prices $60 million offering as oil prices rebound; Syntroleum, Regi obtain equity lines

By Sheri Kasprzak

New York, Nov. 21 - As oil prices climbed back above $60 per barrel, Ausam Energy Corp. negotiated a private placement for up to $60 million and at least $45 million to finance oil and gas lease acquisitions.

"A lot of the oil offerings we're seeing now are related to some acquisition or merger," said one sellside market source based in Canada. "The premium is just through the roof [on the Ausam deal]. The only way to get that kind of premium now is if you've got some kind of transaction going on that makes it worthwhile."

Even so, Ausam's stock dropped by 10% after the deal was announced Tuesday morning. The stock fell by 3 cents to end at C$0.27 (TSX Venture: AUZ).

The [Ausam] offering was priced at a 100% premium to the company's C$0.30 closing stock price on Monday.

The deal includes up to 114,613,181 units and at least 85,959,885 units at $0.5235 each, or C$0.60 each.

The units consist of one share and one half-share warrant with each whole warrant exercisable at C$0.65 each for two years.

The deal is set to close Dec. 31.

Proceeds will be used to pay the cash portion of the company's acquisition of oil and gas leases in Texas, Louisiana, Mississippi, Alabama and Arkansas. The leases are expected to cost $35 million, comprised of $15 million in cash and 63,417,143 in stock.

Under the terms of the acquisition agreement, Ausam was required to raise at least $45 million in a private placement.

Back in September, Ausam priced a C$1.75 million offering also connected to the planned acquisition. In that deal, the company sold 4,375,000 units of one share and one warrant at C$0.40 each.

In May 2005, the company sold 8,888,889 units in a private placement for proceeds of C$8 million.

Calgary, Alta.-based Ausam is an oil and natural gas exploration company.

Two equity lines sealed

In other private placement news, Syntroleum Corp. zipped a $40 million common stock equity financing with Azimuth Opportunity Ltd. and Regi U.S., Inc. closed a $10 million equity line of credit Tuesday.

Azimuth may buy shares of Syntroleum over the next two years at a discount ranging from 3.125% to 6.25% to the volume weighted average price of the stock over an 11-day pricing period, with a $1.37 floor.

The underlying shares are being issued under the company's shelf registration.

Proceeds will be used for the commercialization of the company's coal-to-liquids and gas-to-liquids technologies, research and development, potential investments in complementary businesses or technologies and for working capital.

On Tuesday, the stock gave up a penny to settle the day at $2.73 (Nasdaq: SYNM).

Syntroleum, based in Tulsa, develops synthetic liquid hydrocarbons from natural gas or synthetic gas.

Regi's equity line

Similarly, Regi U.S. wrapped a $10 million equity line that sent its stock climbing more than 14%.

The company announced the line Tuesday morning and by the end of the day, the stock had soared 16 cents, or 14.04%, to end the session at $1.30 (OTCBB: RGUS).

The company may sell shares of its stock at a 15% discount to the market price over the 10 days before a draw for the next three years.

The investor received warrants for 1 million shares, exercisable at $1.30 each for five years.

JH Darbie & Co., Inc. was the placement agent.

Proceeds will be used for additional applications of the company's Rand Cam/RadMax technology.

Vancouver, B.C.-based Regi's Rand Cam/RadMax technology is used in lightweight rotary engines with two moving parts. The engine may use gasoline, hydrogen, natural gas, propane and diesel fuels.

First Capital to raise $50 million

In other news, announced its plans to close a $50 million offering of unsecured subordinated convertible debentures in late November or early December.

The 5.5% debentures are due Sept. 30, 2017 and are convertible into common shares at $27.00 each through Dec. 31, 2011 and at $28.00 each from Jan. 1, 2012 through maturity. Gazit Canada Inc. is the investor.

Another group of investors has agreed to buy $50 million in additional principal of the debentures. Those debentures may be issued in two classes - Canadian debentures and U.S. debentures.

Proceeds will be used to pay down the company's debt facilities and to fund future acquisition and development activities. The rest will be used for working capital.

The company's stock gave up 1.27%, or 34 cents, to end the day at C$26.45 (Toronto: FCR).

Headquartered in Toronto, First Capital owns and develops supermarket-anchored community shopping centers.

Orchid Cellmark raises $14 million

In a deal that sent the company's stock down by 7.13%, Orchid Cellmark Inc. wrapped up a $14,025,600 private placement of 4.87 million shares.

A group of new and existing institutional investors bought the shares at $2.88 each, a 15.5% discount to the company's $3.41 closing stock price on Monday.

The stock reacted badly to the news, giving up 24.3 cents to close at $3.167 (Nasdaq: ORCH). Volume also took off with 967,312 shares traded compared with the average 139,845 shares.

Proceeds will be used for working capital and general corporate purposes.

Cowen & Co., LLC was the placement agent.

Orchid Cellmark, located in Princeton, N.J., provides DNA testing services for the human identity and agricultural sectors.

China Shen Zhou's stock drops 5.4%

Looking to secondary market action, Beijing's China Shen Zhou Mining & Resources, Inc. watched its stock give up 5.45% on Tuesday, a day after announcing its plans to settle a $28 million offering of senior secured convertible notes.

The stock lost 15 cents to close at $2.60 (OTCBB: CSZM). On Monday, when the offering was announced, the stock remained unmoved at $2.75.

In the placement, Citadel Equity Fund Ltd. plans to buy 6.75% notes convertible at $3.20 each, a 14.3% premium to the company's $2.80 closing stock price on Nov. 16.

The deal is expected to close Dec. 10.

Proceeds will be used to purchase a mine in Kyrgyzstan. The rest will be used for expenses related to existing and new mine properties in China and for working capital.

China Shen Zhou is a mineral exploration company focused on fluorite, zinc, lead, copper and other non-ferrous metals in the People's Republic of China.

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