Private placement volume improves despite shaky stocks; Interchange raises $15 million

By Sheri Kasprzak

Atlanta, Dec. 20 - Volume remained strong in the private placement market Monday despite unstable stocks and lower oil.

Volume may have been helped by early gains in the technology sector, according to some sell-side sources.

"Despite the way the day ended, tech stocks were great this morning, and that could have something to do with why volume is reasonably good," said one source.

"Why is volume better today?" asked another sell-side source. "Beyond the fact that Mondays tend to be busier than other days, it's also getting close to the holidays. The market is getting ready to close, so people are getting in those last deals before the end of the year."

In the broad market, stocks closed mixed. The Dow Jones Industrial Average ended the day up 11.68 at 10,661.60; the S&P 500 was up 0.45 to close at 1,194.65, while the Nasdaq composite dropped 7.35 to close at 2,127.85.

Canadian offerings took a hit as oil prices dropped Monday.

"Volume wasn't as good as it has been," said one Canadian sell-sider. "Oil dipped today and that dragged energy stocks down."

Oil prices closed down $0.64 at $45.64 per barrel.

In the United States, Interchange Corp. led action with news that it raised $15 million in a private placement.

The offering included 822,000 shares at $18.25 each and warrants for up to 164,400 shares at $25.53 per share for five years.

Interchange, based in Laguna Hills, Calif., is a paid-search service company that provides businesses with online advertising. The proceeds from the offering will be used to fund the expansion of its paid-search business.

On Monday, the company's stock closed down $1.37 at $20.74.

Workstream closes $14 million deal

Workstream Inc. sold 4,666,666 shares at $3 each to wrap its $14 million private placement.

"It's in line," said one market source.

The company's stock closed up $0.03 at $2.95 on Monday. Throughout December, the company's stock has traded between $2.60 and $2.95.

"Workstream has continued to gain momentum in 2004 by integrating all of our product offerings through the Workstream TalentCenter, completing our strategic acquisitions of Kadiri and Bravanta, expanding our management team and increasing our institutional shareholder base," said Workstream's chief executive officer Michael Mullarkey in a statement. "In 2005, we expect to take a real leadership position in the [human resources] software market with a strong cash position of over $20 million."

Worksteam, based in New York and Ottawa, Ont., provides recruitment and employee services to companies. It plans to use the proceeds from the deal to strengthen its balance sheet and provide additional working capital for its growth strategy, including product development, international expansion and targeted strategic acquisitions.

Aradigm raises $12.5 million

Aradigm Corp. closed a private placement offering for $12.5 million Monday.

The offering included 8.3 million shares at $1.50 each.

The deal also included warrants for 2,083,347 shares at $2.10 each.

"The proceeds from this financing, combined with the more than $50 million we expect to receive from Novo Nordisk in connection with the pending restructuring of our agreements with them, should allow us to fund our operations to 2007, when we hope to launch our first product," said Bryan Lawlis, Aradigm's president and chief executive officer, in a statement. "This funding places us in an excellent position to move our two self-initiated programs forward."

SG Cowen & Co. LLC was lead placement agent in the offering.

Hayward, Calif.-based Aradigm develops non-invasive delivery systems that allow patients to self-administer biopharmaceuticals and small molecules that would normally be delivered by injection. The company plans to use proceeds from the deal to advance its research and development efforts, for working capital and for general operations.

The company's stock closed down $0.24 at $1.60 Monday.

Orion wraps $12 million offering

Orion Acquisitions Corp. II closed a $12 million in a private placement, part of a merger with Medivation Inc.

Orion sold 7,741,935 shares at $1.55 each.

MDB Capital Group LLC was the placement agent for Orion in the offering and Brock Capital Group LLC was the placement agent for Medivation with regard to certain investors who participated in the deal.

"We are very enthusiastic about becoming a public company and having the requisite capital to implement our business plans," said Orion's new president and chief executive officer David Hung, in a statement. "This capital should allow Medivation to complete a phase II clinical trial in Alzheimer's disease patients with our lead product Dimebon, initiate IND-enabling pre-clinical development of our second small molecule, NT0904, and identify and evaluate other promising medical technologies."

Medivation is a New Zealand-based medical technology acquisition company with a focus on acquiring intellectual property.

Based in San Francisco, Orion is an acquisition company focused on combination, consolidation or merger.

On Monday, Orion's stock closed up $1.9567 at $3.4567.

Diversinet closes deal

Diversinet Corp. raised $2.65 million in an oversubscribed private placement.

About 6,625,000 shares were sold in the upsized offering at $0.40 each.

Diversinet originally planned to raise between $1.75 million and $2.5 million in the deal.

"It's encouraging to see the amount of investor confidence in Diversinet and our open mobile security platform initiatives," said Nagy Moustafa, the company's chief executive officer, in a statement. "As a result of this private placement, the company will have access to the resources required to advance the commercialization of our mobile device security programs into early 2006."

Diversinet is a Toronto-based mobile device security provider. The company intends to use the proceeds from the offering for working capital and general operations, including commercialization activities and product development enhancement.

The company's stock closed up $0.08 at $0.60 Monday.

Global ePoint gets $2.5 million

Global ePoint Inc. wrapped up a $2.5 million in a private placement of shares.

The company sold 500,000 shares at $5 each and warrants for an additional 125,000 shares.

The warrants allow for an extra share at $6.91 for three years.

Investors will also receive an additional 400,000 shares at $5 each during the period after the registration statement is effective.

H.C. Wainwright and Co. Inc. was the placement agent in the deal.

Based in City of Industry, Calif., Global ePoint designs, manufactures, sells and distributes digital video surveillance systems for law enforcement, the military, aviation and homeland security. The proceeds from the offering will be used for general corporate purposes, including investments in technology development and marketing initiatives and for working capital.

Global ePoint's stock closed down $0.26 at $5.27 on Monday.

American Dairy wraps $2 million deal

American Dairy Inc. finished a private placement for $2 million in proceeds, the company said Monday.

The company sold 571,429 shares at $3.50 each on Dec. 6.

The investor in the deal also received warrants for 385,715 shares at $3.80 each.

Los Angeles-based American Dairy produces and distributes milk-related products to China. The company plans to use the proceeds in the deal for the costs of a new walnut powder processing facility and for working capital.

On Nov.8, the company's stock closed unchanged at $3.50 in its last trade.

Diametrics closes first tranche

Diametrics Medical Inc. finished a $1.8 million tranche in a proposed $3 million private placement.

The first tranche consists of fixed-priced convertible notes due Dec. 15, 2007. The notes bear interest at Prime plus 400 basis points with an 8% ceiling.

The notes are convertible into common shares at $0.02 each.

Investors also received warrants for up to 45 million shares at $0.025 each.

Based in St. Paul, Minn., Diametrics manufactures blood- and tissue-analysis systems.

Diametrics' stock closed down $0.003 at $0.047 on Monday.

CalciTech prices deal

CalciTech Ltd. priced a previously announced $1.5 million private placement.

The deal includes 6 million units at $0.25 each. The units are comprised of one share, one full warrant and one half-share warrant.

The full warrants allow for an additional share at $0.35 each for one year and, when whole, the half-share warrants allow for an extra share at $0.50 for two years.

"Subscriptions to the private placement are currently flowing in and we are confident we will raise the intended $1.5 million," said Roger Leonard, CalciTech's president and chief executive officer, in a statement. "We are gratified with the continuing support from our shareholders towards our goal to become a major player in the specialty minerals sector."

Based in Hamilton, Bermuda, CalciTech is a mineral technology company focused on technology that converts industrial lime waste with carbon dioxide into a specialty mineral. The proceeds from the financing will be used for the company's small-scale plant in Germany, the completion of its patent applications for its CalciTech project and the production and delivery of its new product, CalciRG. The company will use the remainder of the proceeds for working capital.

On Monday, CalciTech's stock closed unchanged at $0.30.

CNH raises $1.17 million in notes

CNH Holdings Co. wrapped up a private placement of senior unsecured convertible promissory notes for $1,171,000.

The promissory notes bear interest at 8% annually and mature Dec. 9, 2006.

The notes are convertible into shares at $1.30 each, or a 25% discount to the average closing bid price for the five days including and immediately preceding the interest compounding date. There is a $1 floor on the conversion price.

The offering also includes warrants for 1,171,000 shares. The warrants allow for an additional share at $1.30 each for five years.

CNH Holdings, based in Dallas, is an investment holding company that invests in intellectual property and technology.

The company's stock closed up $0.16 at $1.96 on Monday.

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