Energy Quest negotiates $120 million sale of debentures; Centenario plans C$58 million deal

By Laura Lutz

In the day's largest deal, Energy Quest, Inc. said it plans to settle a $120 million private placement of a zero-coupon convertible debenture on April 1.

The deal priced on Sept. 10, 2007.

Vasant Jain, the company's new chief financial officer, is the investor.

Energy Quest has agreed to repay the debenture at maturity on Sept. 4, 2012.

From Sept. 4, 2012 to Sept. 4, 2017, any outstanding principal amount will be convertible into common stock at a conversion price of $50.00 per share.

Jain said he is "pleased to be contributing to a company that will be providing much needed green alternative energy technologies to the world," in the company's news release.

Energy Quest is a Henderson, Nev.-based developer and producer of hydrogen-enriched alternative fuels.

The company said it will use the proceeds for settlement of its outstanding debts, acquisitions of several companies, business expansion and working capital.

Energy Quest's stock closed at $0.75 on March 4, the date of its last trade.

Centenario to sell special warrants

Up north, Centenario Copper Corp. said it will conduct a C$58 million private placement of special warrants through a syndicate of underwriters led by Canaccord Capital Corp. and BMO Capital Markets.

The Toronto-based mining company plans to sell 10 million special warrants at C$5.80 apiece on a bought-deal basis.

Each warrant will be exchangeable for one common share at no additional cost.

Exercise of the special warrants will be forced three business days after issuance of a receipt for a prospectus covering the underlying shares or 120 days after closing of the placement, whichever is sooner.

Settlement is expected on March 27.

Proceeds will be used for mine construction, exploration and development and for general corporate working capital purposes.

The company's shares dropped C$0.13, or 2.18%, to close at C$5.82 on Thursday (Toronto: CCT).

Gulf, Zoolander cancel deals

Two companies said on Thursday that they have scuttled plans for financings.

China's Gulf Resources, Inc. announced the termination of a $60 million financing with eight investors.

The equity line was originally announced in May 2007. The 18-month agreement would have included up to 30 million common shares at $1.00 apiece.

No shares were sold under the deal.

The company has decided to pursue what it believes will be more cost-efficient funding sources because of the appreciation of its stock since May 2007.

Gulf mines crude salt in China. Its stock gained 10 cents, or 4.17%, on Thursday to close at $2.50 (OTCBB: GFRE).

The stock closed at $2.01 on May 7, the settlement date of the agreement.

Meanwhile, Zoolander Corp. said it is canceling a C$25 million private placement of subscription receipts that was announced in December.

The placement was intended to be conducted in connection with Zoolander's acquisition of 6785905, a hotel management company, which would have been Zoolander's qualifying transaction.

That acquisition was also canceled.

In Thursday's release, Zoolander said it will continue its search for opportunities to constitute its qualifying transaction.

The company said it expects its shares to start trading again on March 10. They have not traded since Aug. 15, 2007, when the closing price was C$0.42 (TSX Venture: ZOO.P).

Biotech sector active

Several biotechnology and pharmaceutical companies also showed up in Thursday's PIPE news.

One, Penwest Pharmaceuticals Co., priced a $25.09 million private placement of stock and warrants.

The placement is expected to include 8.14 million units of one share and one half-share warrant at $3.0825 per unit.

The Danbury, Conn.-based company develops pharmaceutical products based on proprietary drug delivery technologies. It said it will use the proceeds for product development and working capital.

Penwest's stock closed up 26 cents, or 8.58%, at $3.29 on Thursday (Nasdaq: PPCO).

Napo pockets $2.55 million

Elsewhere in the sector, Napo Pharmaceuticals, Inc. said it concluded a $2.55 million private placement of stock and convertibles.

The placement included a $2.25 million convertible with an interest rate of 3.2%. It matures July 31.

Of the note, 25% is convertible into common stock at 27.9p per share. The rest will be repayable in cash at maturity.

Investors who bought the note also received warrants for 3,049,965 common shares, exercisable from July 31, 2008 until March 3, 2013 at 27.9p per share.

In addition, Napo said it raised about $300,000 by selling 600,000 common shares at 25p each.

In connection with the financing, Napo said it obtained extensions of payments to several contractors, deferring about $1.5 million of payments until July 31.

In exchange, those contractors received warrants for a total of 1,084,432 common shares, also exercisable from July 31, 2008 to March 3, 2013.

Based in South San Francisco, Calif., Napo focuses on the development and commercialization of proprietary pharmaceuticals for the global market.

Proceeds of the financing will be used for working capital as the company works toward three clinical benchmarks.

Napo also announced that it recently received full control over the Western commercial rights of crofelemer, a late-state proprietary gastro-intestinal compound.

"We are pleased to announce this financing which allows us to continue to move forward with our Phase 3 CRO-HIV trial. Regaining the commercial control over crofelemer in western territories for all indications is a transformational moment for Napo," Lisa Conte, Napo's chief executive officer, said in a news release.

Its shares closed unchanged at 28.99p on Wednesday, the date of the last trade (London: NAPL).

Parkervision sells stock

Over in high-tech, semiconductor maker Parkervision, Inc. said it raised $9.33 million from a private placement of stock.

The company sold 1,110,999 common shares at $7.50 per share for $8.33 million. It also sold 129,200 shares to its chief executive officer and chairman Jeffrey Parker at $7.74 per share for $1 million.

"We expect this financing to bridge our working capital needs until such time that we begin generating royalty revenue from our current licensees. We are extremely pleased with the quality of both new and existing investors participating in this offering," Parkervision's chief financial officer, Cindy Poehlman, said in a news release.

Located in Jacksonville, Fla., Parkervision develops semiconductors used in wireless products.

Its stock finished Thursday up 52 cents, or 6.62%, at $8.38 (Nasdaq: PRKR).

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