Private placement volume stalls on higher oil, lower stocks; Input/Output raises $30 million

By Sheri Kasprzak

Atlanta, Feb. 16 - As the stock market took a hit from higher oil prices Wednesday, private placement volume also suffered slightly.

"Stocks got off to a down start and we saw some gains in the afternoon, but I just don't think the market was stable enough for a lot of issuance today," said one sell-side source.

The Dow Jones Industrial Average lost 2.44 Wednesday to close at 10,834.88; the Nasdaq composite index gave up 1.78 and the S&P 500 posted gains of 0.22 to close at 1,210.34.

Oil prices pushed stocks down, rising $0.94 to close at $48.20 per barrel.

Meanwhile, some Canadian gold companies closed out deals. Gold stocks, according to one Canadian source, are very strong now and that trend will likely continue throughout the winter.

"I think this winter we will continue to see gold companies out there," said the source. "We've already seen quite a few of them, so it seems like if you're a gold company and you're ready to put a private placement out there, now's the time to get it done."

Back in the United States, Input/Output, Inc. received an input of capital from a $30 million private placement.

The company sold convertible preferred stock to an affiliate of Fletcher Asset Management.

The preferreds pay an annual dividend of 5% and are convertible into 3,812,429 common shares at $7.869 each. The conversion price is a 22% premium to the average of the company's stock on Feb. 11.

The investor has the right to buy up to $40 million additional shares of preferred stock for 2½ years beginning in August. The conversion price of the additional preferreds will be 122% of the then-prevailing price, subject to a floor.

"As we finalized our annual planning process in November and December, we evaluated the various scenarios surround technology adoption rates, market trends, working capital needs, as well as investment opportunities that could present themselves to further enhance our strategy," said Bob Peebler, Input/Output's chief executive officer, in a statement.

"Our board of directors determined that a transaction of this nature and size with an investor who appreciates our long-term strategy gives the company the financial flexibility to execute our business plan with confidence for the foreseeable future. Over the past few months, we have come to know and appreciate the long-term strategic view of the Fletcher team and we believe they will be a valuable stakeholder as we execute our strategy."

Based in Houston, Input/Output provides seismic services.

Input/Output's stock ended the day up $0.05 at $6.96 Wednesday.

FibroGen closes $100 million deal

FibroGen, Inc. said it closed a $100 million private placement offering of convertible preferred stock.

Laura Hansen, a spokeswoman for FibroGen, refused to comment on the terms of the offering and said that the terms will not be released to the public since FibroGen is a private company.

"The primary purposes of this financing were to obtain funds to expand our clinical trial activities and to introduce FibroGen's therapeutic programs to the U.S. institutional investor community," the company's chief executive officer Thomas Neff said in a statement. "We are delighted to have a number of high-quality investors become FibroGen supporters. We appreciate the confidence afford in our people and in our programs."

The investors in the deal included Adage Capital Management, Apothecary Capital, Brookside Capital Partners, Corriente Biotechnology Partners, Duquesne Capital Management, Goldman Sachs, Janus Capital Group, Merlin BioMed Group, Och-Ziff Capital Management, The Rosewood Corp., Sigma Capital Management, T. Rowe Price Yamanouchi Pharmaceutical Co. Ltd., SMBC Capital and Bio Fund Management.

"We really just wanted to secure funds to advance our clinical testing," said Hansen. "We wanted to get out there and talk to U.S. institutional investors. We've been kind of flying under the radar screen, so we wanted to get out there and talk to investors."

Credit Suisse First Boston was the placement agent.

Based in San Francisco, FibroGen is a biotechnology-based drug discovery company. It plans to use the proceeds from the deal to increase staffing and the scope of its clinical activities, including the expansion of its anemia programs and the continued study of idiopathic pulmonary fibrosis and diabetic nephropathy.

Linear closes C$25 million deal

Linear Gold Corp., riding on a strong gold market, closed a C$25 million offering.

The company sold 3,225,808 units at C$7.75 each. The units are comprised of one share and one quarter-share warrant.

The whole warrants allow for an additional share at C$8.50 each for one year.

An underwriting syndicate led by Sprott Securities Inc. and Orion Securities Inc., exercised a greenshoe in the deal for 645,162 additional units.

"I think gold companies are going to see continued gains and that makes for good pricing," said one market source. "This one looks strong and the company will do very well with the warrants."

Linear, based in Halifax, N.S., is a gold exploration and acquisition company. It plans to use the proceeds for the advancement of its Ixhuatan property, the acquisition and exploration of other properties and general corporate purposes.

On Wednesday, the company's stock closed down C$0.01 at C$7.79.

Tudor prices offering

Tudor Corp. Ltd. said it priced a C$4,025,000 private placement Wednesday, comprised of 2.3 million shares at C$1.75 each.

"It looks okay to me," said one market source. "Well, oil was higher today, so that probably helped them a little with the pricing."

The deal is being placed through agent Dominick & Dominick Securities Inc.

Based in Calgary, Alta., Tudor is an oil and gas exploration company. The proceeds from the private placement will be used for its 2005 drilling program.

On Wednesday, the company's stock closed unchanged at C$1.85.

NCT makes small gains

NCT Group Inc.'s stocks edged up slightly Wednesday, a day after closing a $15,986,793 private placement.

The company closed up $0.001 to end at $0.019. On Tuesday, after announcing the deal closed, NCT lost $0.0001 to close at $0.0184.

The company sold notes with a conversion price of $0.018 each.

Based in Westport, Conn., NCT develops products to reduce noise for companies in the media and entertainment industries.

PolyMet stock down

A day after pricing a C$4.95 million private placement, PolyMet Mining Corp.'s stock dipped.

The company's stock ended the day C$0.05 lower at C$0.55. On Tuesday, after announcing the deal, PolyMet lost C$0.01 to close at C$0.60.

The offering includes units sold at C$0.55 each.

Based in Vancouver, B.C., PolyMet is a metals production company.

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