Private placements pick up slightly as stocks climb; Guardian plans $20 million deal

By Sheri Kasprzak and Ronda Fears

Atlanta, Feb. 2 - As stocks continued to climb Wednesday, private placement issuance volume gained a bit of strength, market sources said.

"Things picked up a little bit today," said one sell-side source. "Nothing to write home about, but we are seeing a bit more volume as stocks continue to make gains."

The Dow Jones Industrial Average closed up 44.85 at 10,596.79; the Nasdaq composite index finished the day 6.36 higher at 2,075.06 and the S&P 500 edged up 3.78 to end at 1,193.19.

Technology companies seemed to be jumping on the PIPE bandwagon Wednesday, with several tech names either closing or planning deals.

One market source said tech stocks made good gains earlier this week, but managed only modest gains Wednesday. But the earlier rise, according to the source, may have sparked some issuance among tech companies.

"Sure, if tech stocks in general are doing well, you're likely to see some activity," said the source. "I think that's the case here."

Heading up private placement news in the United States, Guardian Technologies International Inc. announced its plans to offering up to $20 million.

The deal hasn't been priced yet, but the company plans to target accredited, institutional investors worth more than $5 million.

The company has already retained the services of a placement agent.

Guardian, based in Dulles, Va., is a technology company focused on the aviation security and healthcare markets.

The company's stock closed down $0.03 at $4.02 Wednesday.

TFN gets equity line

The Football Network received a $30 million standby equity distribution agreement from Cornell Capital Partners LLC, contingent upon certain circumstances.

The company may draw upon the agreement over the course of two years.

The transaction is contingent upon The Football Network finalizing its Securities and Exchange Commission registration and becoming a fully reporting company.

"I am delighted that we have been able to complete this next step in the process of working with Cornell," said TFN's president Jerry Solomon in a statement. "They have shown a real understanding of our business objectives and I am looking forward to shortly beginning the SEC filing process. This agreement with Cornell opens up several avenues for TFN's growth as a football-based multimedia company."

Based in Baton Rouge, La., The Football Network is a media company specializing in football-related content.

On Wednesday, TFN's stock closed unchanged at $0.22.

ACT plans $14 million offering

ACT Teleconferencing Inc. will raise $14 million in a private placement the company said.

The company will sell an 8% convertible note to a group of institutional investors.

The five-year note is convertible into common shares at $1.05 each.

The investors will also receive warrants for up to 30% of the shares available upon conversion at $1.05 each.

"Tech stocks, as I already mentioned, have been performing well this week," said one market source. "This company has performed well itself, so it's a combination of factors relating to both the sector and the company. This deal will go very well, and you can already see from the rise in ACT's stock that the response is positive."

ACT's stock closed up $0.14 at $0.83 Wednesday.

"We are encouraged by the confidence our new investors have expressed in our business," said ACT's chief executive officer and president Gene Warren in a statement.

"We also believe that ACT is well positioned, due to cost controls and the global reorganization, to achieve the operational metrics specified in the agreement. We expect the favorable structure and terms of the proposed financing package will be well-received by our current financial constituencies."

Based in Golden, Colo., ACT provides audio, video and web-based conferencing products and services to corporations, educational organizations and governments. The company plans to retire $12 million in outstanding debt and the remainder of the proceeds will be used for working capital.

Xoma convert climbs to 102

Xoma Ltd. printed $60 million of seven-year convertible senior notes with a 6.5% coupon and 15% initial conversion premium via placement agent JPMorgan Securities, after sweetening terms. The deal priced cheaply outside of original price talk for a premium range of 22% to 28%, which had been revised to 15%, and at the wide end of yield guidance for a 6.0% to 6.5% coupon.

The issue, sold under Section 4(2), broke to trade under Rule 144A, and shot up right out of the gate. The first look at the issue early Wednesday showed a102 bid and 103 offer, a convertible market source said, and that level held right up to the market close.

Xoma shares on Wednesday added a penny to close at $1.64.

One participant in the convertible said the deal was appealing on the terms as well as a view that the company had "turned a corner."

"Over a year ago, the agreement between XOMA and DNA about Raptiva financing and revenues looked like it would bankrupt XOMA. As the quarterly reports came in it was obvious that Raptiva's so-called success was killing XOMA because the start-up costs exceeded profits," he said.

Raptiva is Xoma's one U.S. Food and Drug Administration-approved product, which has been commercially introduced under a collaboration agreement with Genentech Inc., which was recently restructured by Xoma.

"Today, it looks more promising. XOMA has proven to be a survivor. The downside risk has been significantly reduced by the new agreement," the convertible buyer said.

"Although this company will never achieve a market cap of $6 billion in the next five years, if ever, it will continue to exist. The company, debt free, with a decent pipeline will either be bought out or rise on speculation. I suspect there is some decent money to be made here."

Xoma sees profits in 3 years

Xoma is optimistic about its prospects, too, particularly with regard to the accounting treatment and financial impact of the restructuring of the Raptiva agreement with Genentech, which took effect Jan. 1.

"Because of the importance of the restructuring of this agreement to XOMA's financial results, we felt it would be helpful to give investors a clearer picture of the positive financial impact compared with previously reported trends," said XOMA chief financial officer Peter B. Davis said in a company statement.

"As we have stated previously, this restructuring will immediately benefit our financial results beginning in the first quarter of 2005, by making Raptiva profitable to XOMA and by strengthening our balance sheet. This is an important step in our goal of making XOMA profitable within three years."

XOMA previously stated that it anticipated additional losses on Raptiva beyond third quarter but under terms of the new agreement, XOMA will be entitled to royalties on Raptiva beginning in first quarter 2005, and will be compensated by Genentech for any future development work requested.

A major point in the restructured arrangement with Genentech is the discharge of the $40 million development loan plus accrued interest, which will be recognized by XOMA as income in first quarter. The overall impact also included in XOMA's reported statement of operations for the nine month ended Sept. 30 was a net expense of $16 million, which consisted of collaboration agreement expense of $12.3 million, research and development expense of an additional $3.0 million and interest expense of $0.7 million.

Xoma is also working on several other treatments in ventures, agreements or collaboration with Millennium Pharmaceuticals Inc., Chiron Corp., Alexion Pharmaceuticals Inc., Aphton Corp., Triton BioSystems Inc.; and Zephyr Sciences Inc.

VisiJet raises $4.85 million

VisiJet Inc. said it closed a private placement financing for $4,845,000 in cash.

The company sold a total of $7,695,000 in convertible debentures, with $2.85 million exchanged for previously issued convertible debentures.

The 8% debentures mature Jan. 14, 2015 and are convertible into common shares at $0.35 each.

The investors also received warrants for 4,845,000 shares at $0.40 each for five years.

"The financing comes at an opportune time for VisiJet," said the company's chief executive officer Randy Bailey in a statement. "We received FDA approval for the EpiLift system in September 2004, and with this round of financing, the company will have the ability to fund a sales and marketing program to support this unique product. We are determined to build a sales team with the ability and focus to drive the rollout both in the United States and internationally."

Based in Irvine, Calif., VisiJet is a medical device company focused on marketing and developing ophthalmic surgery products for the laser-eye surgery and cataract-surgery markets. The proceeds from the offering will be used to support marketing and sales of its lead product, the EpiLife System. The remainder will be used to improve the company's short-term debt structure.

The company's stock closed up $0.015 at $0.525 Wednesday.

JMAR closes $4 million deal

JMAR Technologies Inc. said it sold 3,225,806 shares for proceeds of $4 million in a private placement.

The company sold the shares at $1.24 each to four institutional investors.

The investors also received warrants for 1.2 million shares at $1.73 each.

In conjunction with this financing, the company amended the terms on its convertible preferred stock sold to Laurus Master Fund Ltd. in January and February 2004.

"This financing and preferred stock amendments add $7.7 million in liquidity, enhancing JMAR's current cash position of approximately $6 million and untapped $3 million working capital line with Laurus," said the company's chief financial officer Dennis Valentine, in a statement. "This increased liquidity enables the acceleration of our development and marketing of the BioSentry, X-Ray Microscope and X-Ray Nano Probe product lines."

Based in San Diego, JMAR develops laser-based equipment for imaging, analysis and fabrication at the nano-scale.

JMAR's stock closed down $0.07 at $1.42 Wednesday.

Sparta arranges $3 million offering

Sparta Commercial Services Inc. will head to the private placement market with an offering for up to $3 million.

The deal includes up to 30 units at $100,000 each. The units include 1,000 shares of series A convertible redeemable preferred stock and warrants for 320,513 shares.

The preferreds pay an annual dividend of 6% and are convertible into common shares at the rate of one preferred for 641 shares.

The warrants are exercisable at $0.195 each for three years.

Based in New York, Sparta provides leasing and retail installment contract financing to the power-sports industry.

On Wednesday, the company's stock closed unchanged at $0.55.

Velocity Express raises additional $1.9 million

Velocity Express Corp. said it raised $1.91 million in additional proceeds from a $21 million deal closed in December.

The additional notes bear interest at 6% annually and mature the earlier of April 30, 2005 or the date upon which the company's stockholders vote to not approve the conversion of the notes and the additional notes.

The notes are convertible into series M preferred stock at an initial price of $0.0737 each.

The preferreds pay annual dividends of 6% and are convertible into common shares at a rate equal to the liquidation preference per share divided by the conversion price.

Westport, Conn.-based Velocity provides technology infrastructure networks. It plans to use the proceeds from the deal to improve its operations with technology and additional management resources, to strengthen its balance sheet and to provide increased liquidity.

Velocity Express's stock closed down $0.01 at $0.24 Wednesday.

Numerex wraps offering

Numerex Corp. said it has closed a private placement financing for $1.5 million.

The company sold a secured convertible term note to Laurus Master Fund, Ltd. The note bears interest at 8% annually and is convertible into common shares at $5.31 each. The note matures in three years.

Laurus also received warrant for 100,000 shares at $5.62 each. The warrant may be exercised on a cashless basis in two separate tranches.

Based in Atlanta, Numerex is a communications technology business that operates subsidiaries in the wireless, internet and cable infrastructure industries. It plans to use the proceeds from the private placement for working capital.

On Wednesday, Numerex's stock closed up $0.05 at $5.05.

Canadian offerings

Leading Canadian private placement news, Producers Oilfield Services Inc. announced its plans to raise C$31.5 million in a private placement.

The company will issue 7 million shares at C$4.50 each.

The deal is being placed through a syndicate of underwriters led by Peters & Co. Ltd.

The deal is scheduled to close Feb. 18.

Calgary, Alta.-based Producers provides management, systems and financial services to oilfield services companies. The proceeds from the private placement will be used to partially fund its 2005 capital expenditure program and the remainder will be used for general corporate purposes.

The company's stock closed down C$0.02 at C$4.88 Wednesday.

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