Devcon gears up to settle $45 million note deal; Western Goldfields seals first tranche of $6 million PIPE

By Sheri Kasprzak

New York, Feb. 13 - As earnings season continued, Devcon International Corp. led PIPE activity Monday with news of a $45 million convertible note deal.

The note offering, which is slated to close March 9, sent the company's stock slightly lower. The stock closed down 2.2%, or $0.20, to end at $8.90 (Nasdaq: DEVC).

Back in November, Devcon announced that it plans to acquire Guardian International, Inc. Guardian, based in Hollywood, Fla., develops fire and burglary alarm systems.

Proceeds from the private placement will be used to pay for the acquisition and to repay an $8 million bridge loan from November 2005.

The notes in the placement are convertible into a total of 45,000 shares of series A convertible preferreds. The preferreds are then convertible into common shares at $9.54 each.

The company had 5,826,660 outstanding common shares as of Nov. 15, 2005.

The investors will receive warrants for 1,650,943 shares, exercisable at $11.925 each.

The full terms of the offering could not be determined by press time Monday.

Turning to the company's latest earnings report, Devcon incurred a net loss of $1.78 million for the quarter ended Sept. 30, 2005, compared to a net income of $3.60 million for the same period ended Sept. 30, 2004.

Based in Deerfield Beach, Fla., Devcon provides electronic security services to commercial and residential clients.

In the broader PIPE market, one market source said volume was knocked down slightly by a combination of lackluster stocks and earnings season.

"I just think a lot of it is earnings," said the source. "This is probably what we're going to be dealing with for the week. It might get a bit better if stocks improve."

Another sellsider said there is a market for offerings coming from the tech sector, but stocks in that sector were off on Monday. Drug stocks were also off for the most part Monday, he said, which dulled what had been reasonably heavy PIPE activity in that sector.

"Especially things like [voice over internet protocol]," he added about specific tech offerings that may be in the pipeline in the coming week.

Looking to stocks, the Dow Jones Industrial Average fell 26.73 to close at 10,892.32, the Nasdaq composite index slipped 22.07 to end at 2,239.81 and the Standard & Poor's 500 composite index dropped 4.13 to close at 1,262.86.

Western Goldfields' offering

Back to more specific PIPE offerings, Western Goldfields, Inc. wrapped up the first tranche of a $6 million unit offering for $3.7 million.

In total, the company intends to sell 20 million units at $0.30 each. In the first tranche, the company sold 12,333,333 units.

The units consist of one share and one half-share warrant. Each whole warrant is exercisable at $0.45 each for two years.

The second tranche is expected to close Feb. 21.

Shortly after the offering and other news was announced Monday morning, Western Goldfields' stock jumped more than 50%. It ultimately gained 76.25%, or $0.26, to close the day at $0.601 (OTCBB: WGDF).

The offering comes on the same day that Western announced the termination of its merger agreement with Romarco Minerals Inc. For the termination, Western Goldfields will pay $1,953,257 of the placement proceeds to Romarco.

The rest of the proceeds will be used to repay a $1.5 million debt facility and to finance a feasibility study at the Mesquite Mine. Any remaining proceeds will be used for general corporate purposes.

Also on Monday, Western Goldfields appointed Randall Oliphant as chairman of its board and Vahan Konig as a director. James Mancuso resigned as a director of the company. The company also named Raymond Threlkeld its chief executive officer, Brian Penny its chief financial officer and Paul Semple its vice president of projects.

Based in Toronto, Western is a gold exploration company.

Mint Technology wraps $4 million deal

Moving to the tech sector, Mint Technology Corp. raised $4 million from a secured loan from Kodiak International LLC.

For the loan, Kodiak received warrants for 9.9 million shares, exercisable at C$0.25 each for two years.

The loan is due Aug. 8, 2008 and bears interest at Libor plus 750 basis points. The loan is payable in monthly installments beginning March 31, 2007.

Proceeds will be used for working capital.

"This financing will provide us with the funding to continue to leverage our leadership position in the prepaid credit card sector in the Canadian marketplace," said Frank Maduri, the company's chief executive officer, in a statement. "Furthermore, we will be able to meet and fulfill client demands for our product and continue to develop strong, strategic relationships in the industry."

"Mint Technology Corp., with its early mover advantage in the growing prepaid credit card business, quickly expanding customer base and market potential, is the type of company we look to support," said David Jackson, principal of Kodiak, in a statement.

Mint's stock remained unchanged on Monday at C$0.27 (TSX Venture: MIT).

Toronto-based Mint develops technologies for prepaid credit cards.

Sunridge Gold raises C$5.23 million

Heading up light Canadian PIPE activity Monday was a C$5,229,000 offering from Sunridge Gold Corp.

Sunridge issued 3.15 million units at C$1.66 each to Lundin Mining Corp.

Lundin will receive one share and one warrant per unit. The warrants are exercisable at C$2.07 each through Feb. 9, 2008.

Salman Partners Inc. was the placement agent.

The company's stock lost 9.09%, or C$0.20, to close at C$2.00 after the placement was announced Monday morning (TSX Venture: SGC).

Proceeds will be used for the advancement of the company's projects in Eritrea and for working capital.

Vancouver, B.C.-based Sunridge is a gold and copper exploration and development company.

Standard Uranium's stock slips

On Monday, Standard Uranium Inc.'s stock fell more than 6% after the company settled a $7 million convertible debenture offering on Friday.

The stock dropped C$0.16, or 6.27%, to end at C$2.39 (TSX Venture: URN).

On Friday, the company's stock lost C$0.05, or 1.92%, to close at C$2.55.

The debentures sold in the placement are convertible into common shares at US$1.45 each.

Vancouver, B.C.-based Standard is a uranium exploration company.

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