StockerYale turns to investors for financing help

StockerYale Inc. last week issued 900,000 stock options to two investors as part of a deal to extend the company’s credit, according to the Salem company’s filing with the SEC.

The stock, which represents about 3 percent of the value of the company, was sold to the creditors for a penny a share, but if the creditors sell it for cash, StockerYale would recoup 90 cents a share – the price the stock has been selling at for the last few weeks.

Some 750,000 shares went to Laurus Master Fund Ltd., a New York-based fund family that already owned nearly 5 percent of the StockerYale stock. As part of the deal, Laurus agreed to refinance, lending the company $4 million with a minimum interest rate of 8 percent due at the end of 2008. Laurus Capital is owned by Eugene and David Grin.

The other 150,000 shares went to The Eureka Interactive Fund Ltd., a London-based hedge fund that already owned 15 percent of the company’s stock. Eureka extended a $1.5 million note two years to the beginning of 2007.

Marshall Wace serves as the investment manager of Eureka, and Ian Wace and Mark Hawtin each have substantial equity in the company.

StockerYale, an illumination and fiberoptics company, has been undergoing reorganization in the last few months as it tries to strengthen its cash position and reposition itself in the marketplace. It recently sold off its Salem and Canadian facilities, leasing them instead, and announced plans to jettison its older-line operations, concentrating on newer laser and specialty optical fiber lines. It also announced a 14 percent workforce reduction.

It’s unclear whether the workforce reduction will translate into layoffs at the firm’s Salem headquarters, which employs 35 people. Company officials have repeatedly refused to return phone calls.

In addition, the company faces a class action lawsuit over alleged insider trading as well as possible delisting from the Nasdaq exchange because it has been unable to keep its stock price over a dollar since September. – BOB SANDERS

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