Canada takes long holiday weekend; American Racing a draw; KidsFutures higher

By Ronda Fears

Memphis, Aug. 4 - Private placement flow was severely hampered Friday by a lull in action north of the border as many Canadian players exited early or took the day off altogether, extending a long weekend as the Canada markets will be closed Monday for the civic holiday observed in most provinces.

There was "Nothing to report in Canada ... but that is not a big surprise," said a syndicate source in Toronto. "We have a holiday on Monday and the equity market is closed. Most brokers and sales people make it a really long weekend [by taking all or part of Friday off] so no surprise on the lack of deals."

Another sellside source said the drop in crude futures contributed to the lack of activity, both in Canada and the United States. September crude settled 70 cents lower at $74.76 on Friday on the New York Mercantile Exchange after Tropical Storm Chris was downgraded to a tropical depression, easing fears it would hurt oil production in the Gulf of Mexico.

There was one deal originating out of Canada on Friday, however, plus a couple of new deals on the tape from the United States.

American Racing bags $2 million

In racing vernacular, American Racing Capital, Inc. shares were a draw Friday on news it has arranged a $2 million private placement of convertible notes with New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC.

American Racing shares (Pink Sheets: ANRC) were quiet Friday, ending unchanged at 25 cents.

The three-year secured notes pay interest at 6% and are convertible into stock at a percentage of the average of the lowest three trading prices of the company's common stock during the 20 trading days before conversion. The percentage is 50% but will be 55% if a registration statement for the stock is filed within 30 days of closing and 60% if the registration statement becomes effective within 120 days of closing.

American Racing can prepay the notes if its stock is at or below cents and if the average daily price every day in any one-month period is below 25 cents then the company can prepay part of the outstanding notes, the exact sum to be 101% of the principal amount divided by 36 plus one month's interest. Such a prepayment will stay conversions for the following month.

Investors also received seven-year warrants for 10 million shares, exercisable at 30 cents.

At the first closing on July 26, American Racing issued $700,000 of the notes. A further $600,000 will be sold when American Racing files a registration statement for the underlying stock, and the final $700,000 will change hands when that registration becomes effective.

American Racing is based in Myrtle Beach, S.C. It has two divisions - Fast One, Inc., a consulting group that develops and designs racetracks, and DJ Motorsports, which plans to develop and operate competitive race teams.

KidsFutures up 18% on deal

In the singular Canadian deal, KidsFutures Inc. shares moved up sharply Friday on news it has completed the first closing of a convertible debenture financing, raising C$1.4 million of proceeds. Further securities may be sold if there is investor interest, the Toronto-based company said.

The C$1.849 million three-year debentures were sold at a discount to yield 10% and can be converted in one year at a price equal to the average closing price of the company's common shares over the 20 trading days prior to the conversion date, less the applicable market discount permitted by the TSX Venture Exchange.

KidsFutures shares (TSX Venture: FUT) on Friday added C$0.03, or 18.18%, to settle at C$0.195.

Lead investor in this closing was Stone Asset Management Ltd.

Holders who convert before maturity will receive a bonus interest of 10% per annum on the original amount invested, with the extra interest added to the amount converted, and 500 bonus shares per C$1,000 principal amount of debentures.

In the deal, investors also received 751 warrants to buy common stock per C$1,000 principal amount, exercisable after Aug. 3, 2007 and up to Aug. 3, 2008 at the market price of the stock with a floor of C$0.35 and ceiling of C$1.00.

KidsFutures operates a program of rewards that can be converted to cash and directed into an existing or new education savings plan, such as an RESP, at any financial institution.

Cannasat drops on closing

In more news from Canada, Cannasat Therapeutics Inc. shares dipped Friday when the company announced the closing of a non-brokered private placement of units that fetched gross proceeds of C$763,000 for the Toronto-based biotech, which focuses on cannabis and cannabinoid drugs.

Cannasat shares (TSX Venture: CTH) dropped C$0.005, or 2.33%, to end at C$0.21.

Proceeds from the offering will be used to fund ongoing research and development as well as working capital and general corporate activities.

Cannasat is pursuing cannabinoid-based pharmaceutical products through application of drug delivery technologies and promoting medicinal cannabis research and education with its business partner, Prairie Plant Systems Inc., the only government-licensed grower and distributor of medicinal cannabis in Canada.

Whiterock, Killam decline

In a couple of other Canadian deals from earlier in the week, Whiterock Real Estate Investment Trust and Killam Properties Inc. were both lower on Friday.

Whiterock REIT raised C$10 million in a private placement of 7.5% subordinated convertible debentures, convertible into trust units at C$3.75 each. Whiterock units (Toronto: WRK) lost C$0.04, or 1.23%, to close Friday at C$3.21.

Killam fetched C$15 million in a private placement of stock at $C$2.30. Killam shares (Toronto: KMP) slipped C$0.09, or 3.47%, to end at C$2.50.

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