Private placement volume remains moderate; CI Sell Cars/Strategy International receives $50 million

By Sheri Kasprzak

Atlanta, Nov. 17 - Demand for private placements remained strong Wednesday as oil prices climbed and the stock market improved.

Oil jumped $0.73 to end at $46.84 per barrel Wednesday.

The Dow Jones Industrial Average climbed 61.92 to close at 10,549.57, the Nasdaq composite index was up 21.06 to end at 2,099.68 and the S&P 500 was up 6.51 to close at 1,181.94.

"Volume looks pretty good today," said one sell-side source. "Deals are getting done and the market is certainly looking better for these kinds of deals."

Even so, one issuer said he feels his company and others like it are undervalued.

"The market has been funny for the past few months," said Chris Tomanik, chief financial officer of Capstone Gold Corp. "I think 12 months ago a lot of these companies [with private placement offerings] would have had deals that priced a lot better."

On Nov. 4, Tomanik's company announced it would be offering C$8.5 million in a private placement.

Tomanik said that even though he felt the deal could have priced better, when investors open their pocketbooks, it's hard to wait.

"It's hard to turn down money when it's being offered to you," Tomanik said. "It will probably be the last private placement we do."

Canadian private placement volume remained moderate, fueled in part by improved oil prices.

"Oil's better today, so I think volume here is a bit better as well," said one Canadian source.

Six Canadian companies made announcements about private placements Wednesday.

Heading up private placement action in the United States was a $50 million deal wrapped by CI Sell Cars Inc. and its subsidiary Strategy International Insurance Group Inc.

The company sold 5,000 units made up of one share of series A insured redeemable preferred stock, one share of series B insured redeemable preferred stock and a warrant at $10,000 per unit.

The series A preferreds mature after three years.

Each series B preferred allows the investor to receive a pro rata share of 5% from each of the five special purpose real-estate properties in which the company plans to invest.

Each three-year warrant allows for the purchase of additional common shares at a $1.6671 exercise price.

CI Sell Cars is a Tomball, Texas, car dealer. Strategy International is a Toronto-based insurance provider of specialty insurance, reinsurance and structured risk assessments. The company plans to use the funds from the financing to invest in five special-purpose residential real estate properties in Canada developed by the Lux Group Inc.

On Wednesday, Strategy's stock closed up $0.10 at $1.60.

Sunair wraps $15 million deal

Sunair Electronics Inc. wrapped up a $15 million private placement on Wednesday.

Coconut Palm Capital Investors II Ltd. bought three million units of one common share, one three-year warrant and one five-year warrant at $5 per unit.

The three-year warrant allows for the purchase of an additional share at $6. The five-year warrants allow for the purchase of an additional share at $7.

The investor also has the option to buy an additional two million units for an additional $10 million.

Sunair is a Fort Lauderdale, Fla.-based manufacturer of long-range, high-frequency radio equipment. The company plans to use the proceeds from the deal to form a new pest-control services division and to finance acquisitions of additional pest-control services in the United States.

Sunair's stock closed up $0.87 at $5.87 Wednesday.

Bioject closes $2.4 million private placement

Bioject Medical Technologies Inc. raised $2.4 million in a private placement of convertible preferred stock.

The company sold 2,086,957 shares of series D preferreds at $1.15 to Life Sciences Opportunities Fund II LP and Life Sciences Opportunities Fund II (Institutional) LP, two funds managed by Sanders Morris Harris.

The preferreds are convertible into one share of common stock.

The investors also received warrants to buy a total of 626,087 common shares at $1.15 each.

"This represents a strategic investment by SMH in Bioject which we believe will assist us in our business-development efforts through the numerous relationships that they have forged in the life-sciences sector," said Bioject president and chief executive officer Jim O'Shea in a statement.

"We believe this equity capital, coupled with license and development fee milestone payments we expect to receive and our planned asset-based borrowing, will provide Bioject with sufficient capital into 2006."

Bioject, based in Bedminster, N.J., is develops needle-free drug delivery systems. The company plans to use the proceeds from the financing for working capital.

VoIP releases details on deal

VoIP Inc. released details on its previously announced $1.55 million private placement Wednesday.

The company sold 1,937,500 shares at $0.80 per share to four accredited investors on Nov. 11.

Warrants to buy 589,250 shares at $1.75 per share for five years and warrants to buy 968,750 shares at $1.20 for 30 days were also included in the offering.

Spencer Clark LLC and MZM Capital acted as placement agents in the deal.

Proceeds from the deal will be used to fund the expansion of VoIP's operations, including the development of new distribution channels, increased marketing efforts and the growth of customer service, support and sales operations.

Based in Fort Lauderdale, Fla., VoIP is a voice-over technology company.

The company's stock closed up $0.19 at $1.69.

ProspEx closes C$20 million deal

Leading private placement action in Canada was a C$20.01 million deal sold by ProspEx Resources Ltd. Wednesday.

The company sold 6.9 million shares at C$2.90.

The offering was placed through lead agents Peters & Co. Ltd., First Energy Capital Corp. and Tristone Capital Inc.

Calgary, Alta.-based ProspEx is an oil and natural gas company. The company plans to use the proceeds from the financing to increase its capital expenditure program for 2005. The proceeds may also be used to temporarily reduce the company's indebtedness.

ProspEx's stock closed up C$0.04 at C$3.16 on Wednesday.

Exceed Energy closes upsized deal

Exceed Energy Inc. closed an upsized C$4.7 million private placement.

The company sold 5,172,413 flow-through class A shares at C$0.58 and 3,794,055 class A shares at C$0.45.

On Nov. 3, the company announced it planned to raise C$4 million through the placement.

GMP Securities Ltd. acted as placement agent in the deal.

Exceed, based in Calgary, Alta., is an oil and gas exploration, development and exploitation company. It plans to use the proceeds from the financing for ongoing exploration and development and for general corporate purposes.

Exceed's stock closed up C$0.02 at C$0.40 Wednesday.

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