NEWS ---------NEWS---------Cell-Loc jumps 64% after word of Wi-LAN financing
Lily Nguyen
04:03 EST Thursday, January 11, 2001
CALGARY -- Shares in battered Cell-Loc Inc. jumped 64 per cent yesterday, a day after sister company Wi-LAN Inc. said it will receive $13-million in new financing.
Company officials were hard-pressed to explain the leap, but one analyst said the most likely reason was that Wi-LAN's new financing alleviated fears that it could be selling Cell-Loc holdings to raise funds for its own operations.
"The mindset is that there was an overhang of stock that Wi-LAN was continuing to sell slowly, whenever it could, to raise money to fund its own activities," said Barry Richards, an analyst with CIBC World Markets in San Francisco. "Now that issue has been almost completely removed."
Stock in the Calgary-based maker of locating devices has declined steeply from its $20-range in late October to a low close of $2.44 on the Toronto Stock Exchange on Tuesday. But yesterday, it recovered the losses it has suffered so far in the new year by gaining $1.56 to close at $4.
It's still a long way from its 52-week high of $80.
Mr. Richards said Wi-LAN had received 1.8 million Cell-Loc shares years ago in exchange for technology, though he did not know how much the company still held.
On Tuesday, Wi-LAN, also of Calgary, said it had come to a bought-deal agreement with a syndicate led by Research Capital Corp. that would raise $13-million in working capital for the company.
The company originally said it would raise $6.5-million in the deal, but revised the figure upward later that day and attributed the change to higher-than-expected demand for the offering. Investors had been concerned Wi-LAN was facing an impending cash crunch.
Tim McNulty, a spokesman for Cell-Loc, played down Mr. Richards' theory and discouraged the prevailing view that the two companies are linked.
"I would say it's not related to Wi-LAN whatsoever," he said.
Shares in Wi-LAN and Cell-Loc have appeared to move in tandem in the past. The founders of the companies, Michel Fattouche of Cell-Loc and Hatim Zaghloul of Wi-LAN, are close friends, and it's believed that investors tend to hold shares in both companies.
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