U.S. private placement volume remains weak; Western Canadian plans big deal

By Sheri Kasprzak

Atlanta, Jan. 19 - Private placement volume in the United States remained sluggish Wednesday, while Canadian deals dominated the market.

In fact, a Canadian company provided the largest deal of the day and the largest deal so far this year.

Canadian stocks got a boost Wednesday from better gold prices, and that boost, according to sell-side sources, may be pushing private placement volume there.

"Gold is helping issuance here, for certain," said one Canadian source. "Resources in general are doing pretty well, but gold seems to be leading the pack."

The S&P/Toronto Stock Exchange composite index gained 11.88 to close at 9,146.65 on Wednesday.

Some Canadian gold companies did announce offerings on Wednesday. YGC Resources Ltd. revealed its plans to raise C$7 million and Century Mining Corp. said it plans to raise C$1.99 million.

Meanwhile, volume in the United States suffered at the hands of a dismal stock market.

The Dow Jones Industrial Average lost 88.82 Wednesday to close at 10,539.97, the Nasdaq composite index closed down 32.45 at 2,073.59 and the S&P 500 ended the day 11.35 lower at 1,184.63.

A C$100 million offering from Western Canadian Coal Corp. led private placement action Wednesday, providing the largest deal of 2005.

Western Canadian plans to sell 16,393,444 units at C$6.10 each. The units include one share and one half-share warrant.

The warrants allow for an additional share at C$7 each for one year.

According to one Canadian sell-side source, the warrants make the deal appealing.

"With what is happening in the coal market, the warrants will really add some appeal," said the market source. "Expect it to go well. If you look at the value of the warrant, it is worth C$0.35 to C$0.45, so you are buying stock at C$5.65 to C$5.75 versus a close of C$6.30."

"It does look like a good deal," said another Canadian source. "I would agree that the warrants are appealing to investors."

On Wednesday, the company's stock closed down C$0.19 at C$6.18.

Coal stocks, according to several sources, have been performing well and word has it that the strength of the stocks is something that will continue this year.

The deal is being placed through a syndicate of underwriters led by Sprott Securities Inc.

Western Canadian, based in Vancouver, B.C., is a coalmine development company. It plans to use the proceeds from the offering for environmental and regulatory permitting for the company's Brule mine in the Burnt River property. The offering will also provide a portion of the funding for the upcoming construction and development of the company's Wolverine property. The remainder will be used for general working capital.

ViroPharma exchanges notes

ViroPharma Inc.'s stockholders approved the exchange of senior secured notes for convertible notes Wednesday.

The company's 10% senior secured notes due in October 2005 will be exchanged for $62.5 million in senior secured convertible notes due October 2009.

The convertible notes mature Oct. 18, 2009, bear interest at 6% annually and are convertible into common shares at $2.50 each.

The investors also received warrants for 5 million shares.

The offering includes a $12.5 million greenshoe, exercisable through Feb. 18.

The old 6% convertibles were bid up to the 91 area from the 80s over the past few days, convertible traders said, in anticipation of the biotech concern getting stockholder approval to exchange the bridge notes for the new convertibles.

Piper Jaffray & Co. is the placement agent in the offering.

"This is a very important vote for ViroPharma, and the outcome is a significant milestone for our stockholders," said ViroPharma's chief executive officer Michel de Rosen, in a statement. "We can now focus our complete attention on execution in all areas of our business, including clinical development of our product candidates and continued commercialization of Vancocin Pulvules."

The new notes will be used to finance the acquisition of Vancocin Pulvules, an oral capsule antibiotic and rights related to the drug from Eli Lilly & Co.

Based in Exton, Pa., ViroPharm develops and commercializes pharmaceuticals.

The company's stock closed up $0.12 at $3.35 on Wednesday.

AVI plans $24 million direct deal

AVI BioPharma Inc. plans to raise $24 million in a direct placement.

The company plans to sell 8 million shares at $3 each to institutional investors.

The investors will also receive four-year warrants for 1.6 million shares at $5 each.

The shares sold in the deal are being offered under the company's shelf registration.

"We are pleased to complete this financing in today's volatile market," said AVI's chief executive officer Denis Burger, in a statement. "This transaction will allow us to remain full focused on our clinical programs and progress in the lab."

Rodman & Renshaw LLC is the placement agent in the deal.

Based in Portland, Ore., AVI develops therapeutic and gene-targeted treatments for cancer and heart disease.

AVI's stock closed up $2.10 at $4.14 Wednesday.

GeneThera closes deal

GeneThera Inc. raised $1.1 million in a private placement, the company said.

The offering included 11,000 shares of series A convertible preferred stock sold at $100 each to four institutional investors.

The preferreds are convertible into common shares at $1.01 each.

The preferreds carry a dividend of Prime plus 250 basis points, payable monthly.

Three-year warrants for 597,826 shares at $0.92 each were also issued in the offering.

Based in Wheat Ridge, Colo., GeneThera produces genetic diagnostics assays for the agricultural and veterinary industries.

The company's stock closed up $0.02 at $1.07 on Wednesday.

Canadian offerings

The second-largest offering of the day came from Tm Bioscience Corp., which announced a C$7,525,000 deal early in the day and later announced that the deal had been upsized to C$9,309,500.

The upsized offering includes 4.33 million shares at C$2.15 each.

The deal is being offered through a syndicate of underwriters led by Orion Securities Ltd.

The deal was first announced as an offering of 3.5 million shares.

Tm is a Toronto-based genetic testing company. The proceeds from the deal will be used for genetic tests and general working capital.

The company's stock closed down C$0.21 at C$2.16 Wednesday.

YGC plans private placement

Gold mining company YGC Resources Ltd. said it will head to the private placement market with a C$7 million deal.

The offering includes up to 10 million common share units at C$0.60 each and up to 1.25 million flow-through units at C$0.80 each.

The common share units are comprised of one share and one half-share warrant. The whole warrants allow for an additional share at C$1 each for two years.

The flow-through units include one flow-through share and one half-share warrant, exercisable under the same terms as the warrants in the common share units.

Placement agent Pacific International Securities Inc. has an over-allotment option for up to 2 million common share units and up to 250,000 flow-through shares units.

There is a catch, however. YGC must receive conditional approval for its application for listing on the Toronto Stock Exchange in order for the deal to be completed. Pacific International has agreed to sponsor YGC's application.

Based in Vancouver, B.C., YGC is a gold mining and exploration company. The proceeds will be used for development on its Ketza River property in the Yukon and for general working capital.

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