Canadian private placements gain strength; Western Canadian wraps C$115 million deal

By Sheri Kasprzak

Atlanta, Feb. 9 - Canadian private placement volume picked up Wednesday as oil prices closed higher on falling U.S. stocks.

"Things are a bit better here, volume-wise," said one Canadian sell-side source. "Oil is higher. That does help."

Oil prices ended the day up $0.06 to close at $45.46 per barrel.

U.S. private placement issuance remained flat as stocks suffered losses.

"There's really not much to report today," said one U.S.-based sell-sider. "Stocks are lower and issuers may be holding out. That's entirely possible."

The Dow Jones Industrial Average closed down 60.52 at 10,664.11; the Nasdaq composite index lost 34.13 to end at 2,052.55 and the S&P 500 gave up 10.31 to close at 1,191.99.

Meanwhile, Canadian energy issuers took advantage of the slightly higher oil prices to put deals on the table.

ProEx Energy Ltd. said it plans to raise C$22.75 million in a private placement, Compliance Energy Corp. announced its plans to raise C$5 million and Paradym Ventures Inc. said it would head to the market with a C$1.61 million offering.

But Western Canadian Coal Corp. led private placement news Wednesday when it announced the closing of a C$115 million private placement - including an extra C$15 million above the originally announced size from the exercise of the over-allotment option.

The company sold a total of 18,852,460 units at C$6.10 each after a greenshoe for 2,459,016 units was exercised.

The units are comprised of one share and one half-share warrant. The whole warrants allow for an additional share at C$7 each through Feb. 9, 2006.

An underwriting syndicate led by Sprott Securities Inc. placed the deal.

The deal was first announced Jan. 19 as a C$100 million offering.

Western Canadian, based in Vancouver, B.C., is a coalmine development company. It plans to use the proceeds from the offering for environmental and regulatory permitting for the company's Brule mine in the Burnt River property. The offering will also provide a portion of the funding for the upcoming construction and development of the company's Wolverine property. The remainder will be used for general working capital.

Western Canadian's stock lost C$0.19 to close at C$6.18.

Grande Cache plans C$35 million deal

Grande Cache Coal Corp. said it plans to head to the private placement market to raise C$35,006,400.

The offering includes 2,574,000 units at C$13.60 each. The units consist of one share and one-half share warrant.

The whole warrants allow for an additional share at C$16.25 each for one year.

"They've [Grande Cache] had a pretty disappointing week," said one market source. "Its stock has performed badly. I believe, from what I've read, they were over budget on one of their projects and they've been suffering since then.

"As for this deal in particular, it's priced okay. I think it will be good for them because they need to recover. The warrants will bring in some solid proceeds."

Grande Cache's stock continued its downward spiral Wednesday when it plummeted C$0.32 to close at C$13.70.

The offering is being placed through a syndicate of underwriters led by Salman Partners Inc. The deal includes an over-allotment option for up to 368,000 units.

Grande Cache is a Calgary, Alta.-based metallurgical coal-mining company. The proceeds from the private placement will be used to fund a feasibility study for mine expansion, ongoing exploration and permit requirements, process plant enhancements and general working capital.

ProEx's C$22.75 million offering

ProEx Energy Ltd. will hit the private placement market with a C$22.75 million offering.

The company plans to sell up to 2.5 million shares at C$9.10 each.

"It looks good to me," said one market source. "It's about a 3% discount, so not so bad at all. This company has made some good business choices, so I think investors will be pleased with that."

On Tuesday, when the deal priced, its stock gained C$0.07 to end at C$9.37. On Wednesday, its stock lost C$0.07 to end at C$9.30.

The deal is being placed through a syndicate of underwriters led by FirstEnergy Capital Corp.

Based in Calgary, Alta., ProEx is an oil and natural gas company. It plans to use the proceeds from the offering to expand the capital investment program for 2005. Some of the proceeds may be used to temporarily reduce existing indebtedness.

AD Capital to raise C$6.4 million

In an offering that hasn't yet been priced, AD Capital US Inc. said it plans to raise up to C$6.4 million.

The details hadn't been completed Wednesday, according to a market source familiar with the deal.

IBK Capital Corp. is the placement agent in the deal.

"AD Capital is an attractive opportunity," said IBK's senior vice president Erik Williams, in a statement. "Environmental technology is in demand. Emissions reductions are desirable. The need for supplementary vehicle emissions reduction technology is evident. The development of the AD platform and business model to the current stage is viewed positively. The interest by potential customers is important. The upside is exciting. The quality of management is noteworthy."

Based in Burnaby, B.C., AD Capital is a vehicle emissions-reduction technology company.

The company's stock closed unchanged at C$3 on Wednesday.

eLec raises $2 million

eLec Communications Corp. wrapped a private placement for $2 million.

The company sold a secured convertible note to Laurus Master Fund, Ltd.

The note bears interest at Prime plus 300 basis points and is payable either in cash or convertible into shares at $0.63 each.

Additional details on the note were not available Wednesday.

"This financing is a significant step in growing our UNE-P and Voice over Internet Protocol business," said eLec's chief exeutive officer Paul Riss in a statement.

"We are proud to say that we have obtained financing at a fixed conversion price that is based on our current market value, which has recently hit a 52-week high, and that the majority of the proceeds of this financing is for new customer acquisitions. We believe we have the people, the back-office systems and a business model that works. We now have the financial resources to enable us to accelerate our growth and capture market share."

eLec Communications, based in White Plains, N.Y., is a telecommunications company. The proceeds from the private placement will be used to support growth.

On Wednesday, eLec's stocks gained $0.08 to close at C$0.74.

Breaker makes gains

A day after announced the upsizing of a private placement C$13,166,000, Breaker Energy Ltd.'s stock jumped.

The company's stock closed up C$0.34 Wednesday at C$3.49.

On Tuesday, when the offering and the exercise of the greenshoe were announced, Breaker's stock dropped C$0.05 to end at C$3.15.

The company plans to sell common shares at C$2.90 each and flow-through shares at C$3.50 each.

A greenshoe was exercised on the deal, which was originally announced as a C$10.15 million offering.

Breaker Energy, based in Calgary, Alta., is an oil and gas company.

China Yuchai's losses continue

China Yuchai International Ltd.'s stocks took a plunge for the second straight day after announcing a $25 million private placement and its acquisition of stake in Thakral Corp. Ltd.

On Wednesday, the company's stock dove $0.44 to close at $10.50. On Tuesday, the company's stock ended the day down $0.16 at $10.95. After the acquisition and private placement of a convertible bond was announced, the company's stock ended down $0.79 at $11.10.

The bond is convertible into shares at $12.969 each.

China Yuchai, based in Singapore, manufactures diesel motors.

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