New Dragon wraps $9.5 million convertible preferred deal; gold may make comeback, sellsider says

By Sheri Kasprzak

New York, Dec. 22 - New Dragon Asia Corp. led PIPE news Thursday, closing a $9.5 million private placement of convertible preferreds.

In the broader market, one sellside source said merger talks between Barrick Gold Corp. and Placer Dome Inc. may spark a return of gold explorers to the PIPE market.

Looking to the New Dragon deal, the company issued 7% series B preferreds to a group of institutional investors led by Midsummer Investment, Ltd. and TerraNova Capital Partners, Inc.

The preferreds are convertible at $1.60 each for a total of 5,937,500 shares.

As of Nov. 4, the company had 47,282,953 outstanding common shares.

The investors will also receive warrants for 2,968,750 shares, exercisable for six years at $1.60 each.

"A key component of the company's expansion strategy is management's ability to enhance its growth and profitability through accretive and complementary acquisitions," said Peter Mak, the company's chief financial officer, in a statement. "The completion of this second financing with Midsummer Investment will enable the company to continue this strategy.

"We are gratified by the continued support and confidence of our investors and look forward to further capitalizing on the significant opportunities in China."

This is the second convertible preferred offering the company has completed this year. In July, the company sold $6 million in series A convertible preferreds to the same investors. Those preferreds are convertible into common shares at $0.95 each. That deal was placed through TN Capital Equities, Ltd.

In its most recent published financial results, New Dragon reported a net income of $1,627,000 for the quarter ended Sept. 30, compared with a net income of $1,192,000 for the same quarter of 2004.

Based in Shenzhen, China, New Dragon mills, sells and distribute flour- and soybean-derived products in China.

The company's stock gained 2%, or 3 cents, to close at $1.53 on Thursday.

Barrick, Placer deal impacts PIPEs

One market source based in Vancouver, B.C., said Thursday that the proposed acquisition of Placer Dome Inc. by Barrick Gold Corp. may impact the private placement market, bringing in more potential issuers.

"I think it will impact us in terms of better gold stocks," said the market source.

The sellsider said rising gold prices have already sparked more issuance among gold producers and a forecast from analysts that gold prices could reach $850 per ounce in 2006 may push more PIPEs in the coming year.

Gold prices closed at $502 per ounce Thursday.

Under the terms of the acquisition, Barrick plans to buy Placer Dome for $10.4 billion.

On Thursday, Placer Dome's stock slipped 31 cents, or 1.37%, to close at $22.34. Barrick's stock dipped 10 cents, or 0.37%, to end at $27.12.

Wavefront raises C$9.5 million

Heading up private placement action in Canada, Wavefront Energy and Environmental Services Inc. sold 7,038,008 shares at C$1.35 each to two institutional investors.

The deal was settled in two closings - one brokered deal from Pritchard Capital Partners, LLC and the other a non-brokered deal.

Proceeds will be used to support Halliburton Energy Services Inc.'s marketing efforts, Wavefront's collaboration efforts with Halliburton for DeepWave systems development, the development of mineral right properties and manufacturing of DeepWave systems. The remainder will be used for working capital.

Based in Edmonton, Alta., Wavefront develops technologies used by oil and natural gas exploration and development companies.

The company's stock fell 9.52%, or C$0.20, to close at C$1.90 Thursday.

Elsewhere in the natural resources market, Highview Resources Ltd. wrapped a C$3,195,464 offering.

The company sold 6.25 million units at C$0.16 each and 11,555,076 flow-through shares at C$0.19 each. The units consist of one share and one half-share warrant. The whole warrants are exercisable at C$0.19 each through June 30, 2007.

Blackmont Capital Inc. was the placement agent.

Proceeds will be used for the development of oil and gas prospects. The rest will be used for general corporate purposes.

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

On Thursday, its stock gained C$0.005, or 3.57%, to close at C$0.145.

Another Calgary-based oil and natural gas explorer, Arsenal Energy Inc., concluded a C$1,745,598 offering on Thursday as well.

The offering included 997,485 flow-through shares at C$1.75 each.

Proceeds will be used for exploration and drilling on the company's Canadian properties.

The company's stock gained C$0.05, or 3.25%, on Thursday to close at C$1.59.

CollaGenex stock edges up

A day after announcing a $29 million direct placement, CollaGenex Pharmaceuticals, Inc.'s stock made gains on Thursday.

The company's stock closed up 16 cents, or 1.36%, at $11.91 Thursday.

On Wednesday, when the company announced the deal, its stock gained 4 cents to close at $11.75.

In the CollaGenex deal, the company plans to sell shares at $10.00 each.

The shares will be sold under the company's shelf registration.

Based in Newtown, Pa., CollaGenex develops dermatology products.

Cambridge Display stock drops

Cambridge Display Technology Inc.'s stock dropped 4.89% after it announced a $17.5 million direct placement.

The company's stock closed down 45 cents to end at $8.75 Thursday.

On Wednesday, when the offering was announced, the company's stock fell $0.95 to settle at $9.20.

In the placement, the company plans to sell shares at $8.00 each under its shelf registration.

Based in Cambridge, England, Cambridge Display develops light-emitting polymers used in electronic display products for communications and entertainment purposes.

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