ChinaTel raises $300 million; Insulet takes $60 million facility; ServisFirst sells stock; IGI places to Signet

By Kenneth Lim

Boston, March 16 - China Telecom Corp. Ltd. plans to sell 49% of its class A common shares to a single investor for $300 million to expand its markets.

Insulet Corp. arranged to take a $60 million credit facility with lead investor Deerfield Management Co. to expand its key insulin delivery system.

ServisFirst Bancshares, Inc. raised $10 million through a stock placement to investors from the community that it serves.

IGI Laboratories, Inc. placed $6 million of convertibles with funds related to Signet Healthcare Partners, GP.

China Telecom raises $300 million

China Telecom plans to sell $300 million of its class A common shares, or a 49% stake, to Olotoa Investments.

The shares will be sold in tranches from March 9 through Sept. 9.

China Telecom's Hong Kong-listed stock (Hong Kong: 0728) closed at HK$2.95 on Monday, higher by 3.87% or HK$0.11.

China Telecom is a Beijing-based provider of wireline telecommunications services.

Olotoa is a privately held investment group that was originally set up to buy distressed real estate properties, but it is now also seeking investment and diversification opportunities.

"This financing is a positive step forward in realizing our vision to acquire, build and operate high speed broadband networks in key markets throughout the world," China Telecom chief executive George Alvarez said in a statement.

Olotoa chief executive Paul V. Olotoa also commented: "Olotoa Investments wishes to diversify its portfolio by becoming a financial partner in the high growth regions of the telecommunications sector. As a leader in telecom infrastructure in emerging markets, we believe ChinaTel is the best opportunity for us to participate in the exciting world of next generation broadband technology on a global level."

"We are also excited about ChinaTel's deployment and operations possibilities in India, the third largest telecom market in the world, where we are currently in negotiations with representatives to duplicate ChinaTel's vision in one of the fastest growing industries in India," Olotoa added.

Insulet in $60 million deal

Insulet has entered into a $60 million loan facility with lead investor Deerfield Management Co.

The company has settled a $27.5 million tranche and may draw down on the facility in $6.5 million increments until Nov. 2010, subject to certain financial milestones. Based upon current estimates and assumptions, Insulet expects to be able to draw down at least an additional $26 million under this facility.

Any amounts drawn under the facility accrue interest at 9.75% per annum. The company will pay 2.75% in interest on undrawn amounts.

The loan is repayable in September 2012.

In connection with the initial tranche of the loan, investors received warrants for 3.75 million shares. The warrants are exercisable at $3.13 for six years. For each additional $6.5 million increment drawn, Insulet will issue additional warrants for 300,000 shares of its common stock with an exercise price equal to 120% of the 15-day volume weighted average stock price.

Insulet common stock (Nasdaq: PODD) closed at $3.15 on Monday, up by 0.32% or $0.01.

Insulet is a Bedford, Mass.-based medical device maker whose chief product is OmniPod, an insulin management system.

"We are pleased that Deerfield, an acknowledged leader in health care investing, sees the potential of our business strategy and that we now have a flexible credit facility enabling us to continue to expand the market for the OmniPod System," Insulet president and chief executive Duane DeSisto said in a press release. "This $60 million facility is an attractive form of financing that limits dilution for our shareholders and gives Insulet access to capital to fuel our growth."

Deerfield partner Howard Furst added: "The OmniPod System is an innovative product with significant growth potential in the diabetes market and other applications. We are confident in the strength of Insulet's business strategy and are pleased to be facilitating the continued expansion of these opportunities for OmniPod. We believe this performance driven financing aligns the incentives and goals of both investors and management."

ServisFirst sees local support

ServisFirst Bancshares placed $10 million of its common stock with 50 investors from the Dothan, Ala. area.

The deal was announced in January and the company has since revised the total size three times.

The company sold 400,000 common shares at $25 per share in multiple closings. In this last tranche, on March 13, it sold 139,460 shares for $3.49 million.

ServisFirst is a privately held client-owned bank based in Birmingham, Ala.

"The confidence our local investors have demonstrated is truly gratifying," ServisFirst Dothan president and chief executive Ronald DeVane said in a press release. "With the local capital of $10 million, the business community is really behind the bank and is responsible for its tremendous growth in Dothan - expected to reach $100 million in the coming months."

IGI places with Signet

IGI Laboratories placed $6 million of convertibles to funds related to Signet Healthcare Partners.

Under the placement, the company sold $1.52 million of series B-1 convertible preferred stock and $4.48 million of secured convertible promissory notes along with an unspecified number of warrants.

Each $6,000 preferred is convertible into 14,634 common shares, for an implied common stock conversion price of $0.41 per share. Upon stockholder approval of the transaction, the promissory notes will convert into 747 series B-1 convertible preferreds. If stockholder approval is not obtained, the promissory notes will become due and the warrants will become exercisable for 747 non-voting series B-2 preferreds at $6,000 per preferred.

IGI common stock (AMEX: IG) rose 15.52% or $0.09 to close at $0.67 on Monday.

Proceeds will be used to support pharmaceutical product development efforts, as well as other general corporate purposes.

IGI is a pharmaceutical company based in Hillside, N.J.

Signet managing directors Joyce Erony and James C. Gale will join IGI's board of directors as part of the deal.

"Given the current challenges in the global economy, we are excited to have Signet as a major stockholder in the company and look forward to a fruitful partnership," IGI president and chief executive Rajiv Mathur said in a statement. "Signet brings to the table its long successful track record of investment in the specialty pharmaceutical industry. This financing will improve our working capital base and provide the company with additional resources to invest in the long-term opportunities available to us while withstanding our shorter-term business volatility. In addition, we anticipate that completion of this financing will allow us to regain compliance with NYSE Alternext US LLC Listing Standards."

Erony added: "We look forward to helping IGI expand its capabilities in dermatology and offering a broader scope of products and services to customers in the near term."

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