BNC Bancorp settles $35 million; Pharming heralds €12 million sale of stock; Luna closes deal

By Devika Patel

Knoxville, Tenn., June 15 - Companies settled some sizable deals in Tuesday's private placement market to assist with expansion plans and working capital needs.

Most significantly, BNC Bancorp announced it completed a $35 million private placement of stock and preferred stock with investor Aquiline Capital Partners LLC.

Also, Pharming Group NV reported it took in €12 million in an oversubscribed private placement of shares. The company said it expected to have low levels of available cash in the near future, so the financing will be needed to help it meet its short-term financing needs.

Canada's gold exploration and development company Luna Gold Corp. concluded a C$33 million private placement of special warrants. The funds were raised to provide working capital and finance exploration work at the company's Aurizona gold operation.

And China Tel Group, Inc., an Irvine, Calif.-based high-speed wireless broadband and telecommunications infrastructure engineering and construction services company, reported that it raised $14 million in a stock placement with investor Isaac Organization Inc.

BNC wraps $35 million

Thomasville, N.C.-based bank holding company BNC Bancorp said it sold 3.5 million common shares and preferreds at $10.00 apiece for $35 million in a private placement anchored by investor Aquiline Capital.

The proceeds will be used to support BNC's expansion in North Carolina and neighboring states.

Aquiline's investment represents approximately 24.9% of BNC's shareholders equity. The total Aquiline investment comprises approximately 9.9% of BNC's common stock and the entirety of a new class of non-voting preferred shares, which are convertible into approximately 15% of the company's outstanding common shares in certain circumstances.

The other investors purchased approximately 7.4% of BNC's outstanding common stock.

"We welcome and appreciate Aquiline's confidence in our management team, our franchise and the significant growth opportunities in the southeastern banking market," chief executive officer W. Swope Montgomery said in a press release. "In addition, we are looking forward to welcoming a banking industry veteran, Mark Graf, to our board as Aquiline's representative."

The company's shares (Nasdaq: BNCN) rose 7.26%, or 69 cents, closing at $10.20 on Tuesday.

Pharming sells €12 million

Pharming Group said it raised €12 million through an oversubscribed private placement of shares. The deal priced and launched May 28, and within two hours, the order book for the offering was oversubscribed and closed.

On May 27, the company announced it planned to take in €12 million. On May 28, the details of the offering were announced, with 100 million shares sold at a price of €0.12 per share.

The price of the shares was determined "based on an extensive period of road shows and marketing research with new institutional investors and existing shareholders," the company said in a press release. The company's share price was dropping steadily toward €0.25 and even good news announcements had no influence. Under such circumstances, the company stated, 50% reductions on the share price are not uncommon.

Pharming said that it had examined multiple funding options since mid April, when discussions were held with several potential investors. Based on the feedback the company received, it concluded that a private placement at a fixed price of €0.12 had "the highest likelihood of success."

Subsequently the company's recent positive developments concerning its drug Rhucin gave an incredible upward response on the stock price. Since then, management tried to raise the final issue price, but some investors had already committed to subscribe for shares, so this was not an option.

The success of this placement was imperative for the company given its cash position and the time needed to bridge the period to anticipated European approval for Rhucin.

Alternatives studied, such as a rights issue, led to too much uncertainty and vulnerability, the company decided. The risk of too little support from investors, an even more extensive prospectus and a more time-consuming offering were not acceptable options given the company's short-term financing needs. As the prospectus could not be made public before receiving approval from the Dutch Authority for the Financial Markets, this was an additional limiting factor.

Roth Capital, Heartstream Corporate Finance BV, First Berlin and Montrose Capital were the agents for the deal. In total, about 40 investors participated in the issue.

Pharming Group is a biotechnology company based in Leiden, the Netherlands. Its shares (Pink Sheets: PHGUF) were unchanged Tuesday, closing at $0.215.

Luna takes in C$33 million

Luna completed a C$33 million non-brokered private placement by selling 58,930,915 special warrants at C$0.56 each.

Proceeds will be used to advance the company's exploration programs at the Aurizona main and regional targets, complete a NI 43-101 compliant resource estimate at the Cachoeira property and provide additional working capital at the Aurizona gold operation.

"We are entering an exciting new phase in the company's planned growth strategy," Luna's chief executive officer Jim Bahan said in a recent press release. "The aim is to quickly expand the size of the gold resource available to the Aurizona plant so that a sustainable increase in gold production can be planned.

"In addition we are encouraged by the exploration progress at our regional claims and at Cachoeira. These funds will allow us to move much quicker on these targets than otherwise. All exploration claims have finite times to complete the work and early starts are essential for thorough assessment of potential," Bahan stated.

The deal priced May 25 and was increased to C$33.13 million from C$20 million on June 9.

The special warrants are convertible into units of one common share and one half-share warrant, with each whole warrant exercisable at C$0.80 for one year.

The Vancouver, B.C.-based company shares (TSX Venture: LGC) were unchanged on Tuesday, closing at C$0.63.

China Tel gets $14 million

China Tel Group reported Tuesday that it raised $14 million in a private placement of stock. It may raise up to $320 million in this deal.

The company sold 9,333,334 series A common shares to Isaac Organization Inc.

Under its investment agreement with Isaac, which was announced in May, ChinaTel will sell up to 49% of its stock to Isaac in installments of up to $15 million or more per month through December 2011, for a total of up to $320 million. Once Isaac has invested $205 million, ChinaTel may terminate the agreement if it determines it is in its best interests.

"We are extremely excited about finally completing a defined roadmap to ensure that we reach our destination. With Isaac as our financial partner and working as a team, we are now focused and will be able to deploy the most extensive wireless broadband network in the world," ChinaTel's president, Colin Tay, said in a recent press release explaining the offering.

ChinaTel's shares (OTCBB: CHTL) fell 2.56% Tuesday, or 1 cent, closing at $0.38.

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