PIPE volume holds steady despite drop in stocks, oil; Lexington Corporate Properties raises $60.9 million

By Sheri Kasprzak

New York, July 18 - Even though stocks took a dip and oil was down for the second straight session, private placement volume remained robust, sell-siders said.

The deals offered up on Monday may have been from issuers that had a specific need for cash and projects that were solid, one sell-sider based in New York said.

"The conditions to do these deals in are not the best right now," said that market source. "We're seeing more and more issuers come in and then leave the market because their stocks get hit or the investors just aren't biting. I think that the [issuers] we're seeing today probably have a clear, specific use for the proceeds and that makes them more appealing even though things are a bit rough."

A second sell-sider said that, although he agrees with the notion that the market conditions in which to conduct PIPEs could be better, he feels the drop in stocks Monday wasn't significant enough to really matter.

"It's a little blip," he said. "Doesn't really matter that much. Tomorrow, once the impact of oil really sets in, stocks [will] go back up and I'm sure [volume] will be fine."

The market conditions on Monday included a drop in oil prices and lower stocks.

Oil dropped $0.77 to close at $57.32 per barrel.

The Dow Jones Industrial Average slipped 65.84 to close at 10,574.99; the Nasdaq composite index dropped 11.91 to end at 2,144.87. and the S&P 500 lost 6.79 to close at 1,221.13.

Activity was led Monday by a $60.9 million direct placement announced by Lexington Corporate Properties Trust.

The New York-based real estate investment trust disclosed that its previously announced offering was done as a direct placement to three institutional investors who agreed to buy 2.5 million shares at $24.36 each.

The shares, which are being sold under the company's shelf registration, are priced at a 3.295% discount to the company's closing stock price of $25.19 on July 12.

Wachovia Capital Markets, LLC is the underwriter in the offering.

The proceeds will be used to repay debt and fund acquisitions. The remainder will be used for general corporate purposes.

A Securities and Exchange Commission filing for the offering was released late Monday.

Lexington's stock closed down $0.23 at $24.02.

The company reported 49,148,925 outstanding common shares as of May 6.

For the quarter ended March 31, the company reported gross revenues of $38,642,000, up from $33,773,000 for the same period in 2004, according to the company's latest earnings report. Lexington, in the report, attributed the $4.87 million increase to rental properties purchased later in 2004 and in 2005.

Big Sky arranges stock deal

Big Sky Energy Corp., a Calgary, Alta.-based oil and natural gas exploration company, announced its plans Monday afternoon to raise up to $25 million in an offering of shares.

The deal includes up to 25 million shares at $1.00 each.

Big Sky's stock remained unchanged at $0.99 Monday.

The company reported 97,829,060 outstanding common shares as of March 31.

The energy company reported a net loss of $2,035,476 for the quarter ended March 31, up from a net loss of $806,959 over the same period for 2004.

American Technology's $14 million deal

San Diego's American Technology Corp. completed a $14 million stock offering Monday, selling 2,868,851 shares at $4.88 each.

The investors in the deal also received class A warrants for 717,213 shares, exercisable at $6.36 each through July 2009, and class B warrants for 864,706 shares, exercisable at $7.23 each for six months after the registration statement is declared effective.

Darcy Beecham, a spokeswoman for American Technology, did not return phone calls Monday seeking additional comment on the deal.

The company's stock dropped $0.60, or 9.72%, to close at $5.57 Monday.

As of April 28, the company had 21,317,239 outstanding common shares.

For the quarter ended March 31, American Technology reported a net loss of $1,613,016, up from a net loss of $1,165,196 incurred for the same period in 2004.

American Technology produces directed-sound technologies and long-range acoustic devices. The proceeds will be used for marketing, sales and deliveries and to prepay unsecured subordinated promissory notes issued in December 2004. The remainder will be used for general working capital.

XsunX raises $10.85 million

In a deal comprised of an equity line and a convertible debenture offering, XsunX Inc. raised $10.85 million from Cornell Capital Partners, LP.

The offering included a $10 million standby equity distribution agreement and $850,000 in convertible debentures.

Cornell may buy shares of XsunX at 96% of the lowest closing bid price for five consecutive trading days before a draw, under the terms of the two-year equity line.

XsunX may draw upon the agreement in tranches of up to $250,000 every five trading days.

Newbridge Securities Corp. was the placement agent for the equity line.

Cornell also bought $850,000 in a one-year convertible debenture.

The debenture bears interest at 12% annually and is convertible into common shares at $0.10 each.

Cornell received warrants for 4.25 million shares, exercisable at $0.15 each and 2,125,000 at $0.20 each for five years.

"Over the last year, XsunX has been fortunate to have established strong relationships with partners such as MVSystems, Inc., made great strides in our product development, expanded our intellectual property assets, and now we have gained a strong partner in the area of finance," said Tom Djokovich, the company's chief executive officer, in a statement.

That financial commitment may come in handy, according to the company's latest earnings report. The company reported no revenues for the quarter ended March 31, nor did it have revenues for the same period in 2004.

The company did incur operating expenses totaling $205,435 for the three months ended March 31, compared to $64,507 for the same period in 2004.

Even so, Cornell justified its investment in a statement heralding XsunX's products as an "exciting new growth industry."

"Our investment in XsunX provides us entry into the photovoltaic market through what we believe is an exciting approach to new uses and applications in solar technology," said Cornell's vice president of corporate finance, David Ratzker, in a statement.

XsunX reportedly had 120,996,239 outstanding common shares as of May 13.

Based in Aliso Viejo, Calif., XsunX develops solar technologies using glass windows to produce electricity.

UEX leads Canadians

UEX Corp., a Vancouver, B.C.-based uranium exploration company, led PIPE news with word of its C$26.5 million stock offering.

The company plans to sell 10 million shares at C$2.65 each through a syndicate of underwriters led by Dundee Securities Corp.

The proceeds from this repeat issuer's most recent offering will be used to explore and develop its uranium projects in the Athabasca Basin of Saskatchewan. The remaining funds will be used for general corporate purposes.

Dundee and CIBC were also underwriters on the company's most recent PIPE offering, closed with a fully exercised greenshoe on June 30.

In that deal, the company sold a total of 6 million flow-through shares at C$2.00 each for total proceeds of C$12 million, including a greenshoe for 1 million additional shares.

Two more oil offerings

Moving back to the oil sector, Houston-based Contango Oil & Gas Co. finished a $10 million convertible preferred stock offering with a group of private investors.

The preferreds are convertible into common shares at $12 each and pay annual dividends at 6% or at a paid-in-kind rate of 7.5%.

Energy Capital Solutions, LP was the placement agent.

"The net proceeds of this offering will supplement the company's already strong cash position and will be used to fund the company's Fayetteville Shale play, as well as the company's offshore Gulf of Mexico deep-shelf exploration program," said Contango chairman and chief executive officer Kenneth Peak in a statement. "Remaining proceeds will be used to fund onshore exploration prospects and any needed commitments to Freeport LNG Development and Contango Capital Partners Fund, and for working capital and general corporate purposes.

"Following this offering, we now have $38 million in cash and short-term investments. We are continuing to make progress on our three major capital expenditure projects. With exploration success, our currently anticipated $4 million to $5 million capital commitments on each of these projects would increase substantially and we felt it both timely and prudent to access the capital markets at a time when commodity prices are near all-time highs and interest rates are at 40-year lows."

Based in Houston, Contango is an oil and natural gas exploration company.

Another oil company, this one based in Calgary, Alta., closed a $5 million private placement Monday.

Triangle Petroleum Corp. sold an 8% convertible debenture.

The debenture is due on June 10, 2007 and is convertible into common shares at $1.00 each.

The single accredited investor who bought the debenture also received warrants for 5 million shares, exercisable at $1.00 each through June 15, 2008.

The latest closing brings to $6 million the total proceeds raised from the offering.

On June 17, the company sold a $1 million debenture under the same terms, to the same investor.

"We are extremely pleased with this strong and accelerated level of financial support," Mark Gustafson, the company's president and chief executive officer, said in a statement. "Closing this funding allows us to aggressively commence the first phase of our exploration timeline."

ThermoEnergy stock closes up

After wrapping up a $6.7 million private placement on Friday, ThermoEnergy Corp.'s stock made some gains on Monday.

The Little Rock, Ark.-based company's stock edged up $0.07 to close at $1.54 Monday.

When the closing was first announced Friday, ThermoEnergy's stock rose $0.02 to end at $1.47.

The company issued units at $1.20. The units include one share of convertible preferred stock and one warrant for 0.45 of a common share. The preferreds are convertible into common shares on a one-for-one basis.

ThermoEnergy designs renewable energy facilities that use municipal and industrial wastewater to make biofuel.

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