Blackhawk Fund obtains $10 million equity line; Arizona Star prices C$6 million PIPE as gold rebounds

By Sheri Kasprzak

New York, Sept. 28 - Leading a somewhat more active day for private placements was a $10 million committed equity line Blackhawk Fund sealed with Dutchess Private Equities Fund II, LP.

Meanwhile, private placement volume picked up some steam on Thursday as stocks edged up and oil prices dropped again.

In the Blackhawk offering, Dutchess agreed to buy shares over the next three years at a price equal to 93% of the lowest closing bid price for the five trading days after notice of a draw.

One market source said penny stocks like Blackhawk are ideal for equity lines like this one.

"When your stock isn't trading very high, something like this is useful because you're in control of when you draw," he said. "The trick is to pick a time over the term when your stock is doing great and then jump on the line."

Even so, Blackhawk's stock dove on Thursday, losing a penny - half its value - to close at $0.01 (OTCBB: BHWF).

Blackhawk Fund, based in Carson City, Nev., provides corporate counseling and financing services to private and public corporations.

In broad market activity Thursday, stocks climbed as oil prices dipped. The Dow Jones Industrial Average gained 29.21 to close at 11,718.45, and the Nasdaq composite index ended up 6.63 to settle at 2,270.02. The Standard & Poor's 500 composite index settled up 2.56 at 1,339.15.

Meanwhile, oil prices lost 20 cents to close at $62.76 per barrel.

Arizona Star plans PIPE

Looking to Canadian private placement offerings, Arizona Star Resource Corp. negotiated a C$6,012,500 stock offering Thursday.

The company plans to sell 650,000 shares at C$9.25 each, an 8% discount to the C$10.05 closing stock price Wednesday.

After the offering was announced Thursday morning, the company's stock gave up 5 cents to settle at C$10.00 (TSX Venture: AZS). Volume of shares traded climbed with 82,925 shares traded compared to the average 19,403 shares.

Pan Atlantic Bank and Trust Ltd., an insider of the company, has subscribed for 211,000 of the shares.

Proceeds will be used for work on the company's Cerro Casale project and for general working capital.

Arizona Star has headed to the PIPE market for funding before. The company closed a C$5.12 million stock deal on Jan. 21, 2005. The company sold 800,000 shares at C$6.40 each. After that deal closed, the stock gained 2 cents to close at C$6.88.

Toronto-based Arizona Star is a gold and copper exploration and development company.

The Arizona Star offering comes as gold prices made a comeback on Thursday, gaining $7.60 to close at $610.90 per ounce.

Even so, Buffalo Gold Ltd.'s stock fell by 8.7% on Thursday after settling a PIPE with a greenshoe earlier this week.

The stock gave up 20 cents to close at $2.10 (TSX Venture: BUF).

As previously reported, the company sold units of one share and one half-share warrant at $1.75 each.

FoxHollow raises $95 million

Elsewhere in private placement activity, FoxHollow Technologies, Inc. is gearing up to settle a $95 million stock deal with Merck & Co., Inc. as part of an expanded collaboration between the two companies.

Merck agreed on Wednesday to buy 3,206,318 shares at $29.629 each, a 9.6% discount to the company's $32.80 closing stock price on Wednesday.

FoxHollow had 25,214,812 outstanding shares as of July 17.

The placement is being conducted as part of FoxHollow's expanded collaboration with Merck to research the removal of atherosclerotic plaque from the arteries.

"It's a great deal for [FoxHollow] because they're getting all this money to do the leg work for Merck," said one buysider reached Thursday evening. "It's a win-win and I fully expect FOXH to be trading above $35 [per share] within a few weeks. And I'm being conservative."

On Wednesday, when the collaboration agreement was announced, the stock took off by $5.55 to close at $32.80.

On Thursday, the stock gained 4.09%, or $1.34, to close the session at $34.14 (Nasdaq: FOXH), slipping 4 cents in after-hours trading.

Volume took off as well with 1,515,655 shares traded compared with the average 462,108 shares.

Under the revised terms of the collaboration and license agreement, Merck will pay $40 million to FoxHollow over four years in exchange for FoxHollow's agreement to collaborate exclusively with Merck. Merck has the option to extend the term of the collaboration and pay $10 million per year thereafter.

Also, Merck will provide a minimum of $60 million to FoxHollow over the first three years for research.

Looking to FoxHollow's latest earnings statement, the company reported a net income of $532,000 for the quarter ended June 30, compared with a net loss of $3.44 million for the same quarter of 2005.

FoxHollow, based in Redwood City, Calif., develops medical devices used to treat peripheral artery disease.

MathStar stock slips

In secondary market activity, MathStar, Inc.'s stock fell after completing a $12.6 million stock offering.

The stock fell by 2.89%, or 13 cents, to close at $4.37 (Nasdaq: MATH). On Wednesday, the stock fell by 50 cents to close at $4.50.

Volume of MATH shares traded Thursday remained elevated with 60,524 shares traded compared to the average 18,324 shares. A total of 61,758 shares were traded Wednesday.

In the offering, the company announced that it plans to sell roughly 3.1 million shares. The precise number of shares could not be determined Wednesday or Thursday.

Piper Jaffray & Co. is the placement agent for the offering, which is scheduled to close in the coming days.

Based in Hillsboro, Ore., MathStar develops programmable logic chips called Field Programmable Object Arrays.

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