Palm to raise $100 million; ATS settles suit; Document Security issues note; Oilex, Beacon on tap

By Kenneth Lim

Boston, Dec. 22 - Palm, Inc. plans to give its capital a boost with a $100 million convertible placement in the PIPE market to a single investor, who will receive an additional board seat.

Separately, ATS Medical, Inc. sold $20 million of its common stock to help settle a lawsuit and to improve its balance sheet.

Document Security Systems, Inc. issued a $1 million promissory note to Baum Capital Investments Inc. to help fund an acquisition.

Other issuers emerged Monday with plans to tap the market.

Oilex Ltd. will offer up to A$10.07 million of its common stock through a private offering to raise working capital.

Meanwhile, Beacon Power Corp. will fund its ongoing operations with a $4.48 million direct offering of stock and warrant units.

Palm to sell convertibles

Palm plans to place $100 million of 0% series C convertible preferred shares with existing investor Elevation Partners, LP.

The placement comprises 100,000 detachable units at $1,000 apiece. Each unit comprises one series C preferred share and warrants to purchase 70 common shares. The preferreds have an initial conversion price of $3.25, while each warrant may be exchanged for common shares at $3.25 per share until Oct. 24, 2014.

Palm common stock (Nasdaq: PALM) closed at $3.05 on Monday, up by 22.49% or 56 cents. Palm has a market capitalization of $334.8 million.

Each preferred is mandatorily redeemable in October 2014.

Palm is a Sunnyvale, Calif.-based mobile computing devices company.

Elevation Partners already owns 325,000 shares of Palm's series B convertible preferred stock. Elevation general partners Fred Anderson and Roger McNamee are serving on Palm's board of directors, and the investor may name one more director to the board following the placement.

"The additional capital from Elevation Partners will enable us to put added momentum behind the new product introductions scheduled for 2009 and will provide us with enhanced stability in unsettled economic times," said Ed Colligan, president and chief executive officer of Palm, in a statement. "Elevation has been a great partner to Palm, and we appreciate their continued confidence and support."

McNamee added: "We believe that Palm is in a position to transform the cell phone industry, and we are pleased to have the opportunity to make this additional investment in the company. Palm has an industry-leading team and an exciting, differentiated product roadmap. We are proud to be associated with the company and look forward to great things from Palm in 2009 and beyond."

ATS sells stock, settles claim

ATS Medical placed $20 million of its common stock with Essex Woodlands Health Ventures to help fund the settlement for a lawsuit and to improve its balance sheet.

The company sold about 8.51 million shares at $2.35 apiece. It also issued warrants for about 2.53 million shares to the investor. Each warrant may be exercised at $2.475 per share in the first year, at $2.85 in the second year and at $3.10 thereafter.

ATS common stock (Nasdaq: ATSI) slipped 3.08%, or 8 cents, to close at $2.52 on Monday. The company's market capitalization is $157.46 million.

Essex Woodlands, a health care-focused venture capital firm, appointed co-founder and managing director Martin Sutter to ATS's board of directors as part of the deal.

"With ATS Medical's technological innovation, strong product portfolio and experienced management team, the company is positioned to be a leader in the cardiac surgery market. We are excited about the opportunity to invest in ATS Medical and share in its success," Sutter said in a statement.

ATS also said Monday that it had settled a lawsuit with Carbomedics. As part of the settlement, ATS will pay Carbomedics $3 million on Dec. 29 and an additional $4.5 million on April 30, 2009. The financing will help to fund the settlement.

"With this financing, we have significantly strengthened our balance sheet and added one of the most respected health care investors in the United States to our shareholder base," ATS president and chief executive Michael Dale said. "In addition, this financing will allow the company to settle a longstanding dispute and related litigation on terms we believe serve the best interest of shareholders. We are pleased to be eliminating the uncertainty and distraction of ongoing litigation."

Document Security takes loan

Document Security Systems issued a one-year secured promissory note to Baum Capital Investments to help fund its acquisition of DPI of Rochester, LLC.

The facility will have a coupon of 12% to 15% and will be secured by assets of Document Security subsidiary Secuprint.

Baum also received warrants for 250,000 shares, which are exercisable at an average price of $2 per share until Dec. 17, 2013. Document Security common stock (Amex: DMC) slipped 3.77%, or 8 cents, to close at $2.04 on Monday.

Based in Rochester, N.Y., Document Security develops technologies used to detect counterfeit documents and currency.

Proceeds will be used to fund Document Security's acquisition of DPI.

Document Security, through Secuprint, has acquired DPI for $940,000 in cash plus the right to assume up to $2.6 million in certain secured equipment leases and loans.

"The acquisition of DPI's assets continues DSS's transformation from an IP licensing company to a customer-driven, full-service manufacturer and strengthens our position in the rapidly expanding anti-counterfeiting and authentication market," Document Security chief executive Patrick White said in a press release.

"By purchasing the assets of DPI, we gain a very capable team, a state-of-the-art commercial print facility and a notable list of clients, all which will enable us to continue growing our security print production capabilities. Our collective team will carry on DPI's reputation for high-quality printing and excellent service to our combined customer group."

"We expect to derive significant operational synergies from the transaction as we consolidate print operations into DPI's facility and integrate the sales forces to pursue cross-sell opportunities," White added. "We also expect to realize margin improvement by bringing in-house certain DSS print products that we had previously been outsourcing. As a result, we expect this transaction to be accretive in the second half of 2009.

"In addition to acquiring the physical assets of DPI and its highly skilled printing staff, we are excited that both of DPI's principals have signed five-year employment agreements, with mutually agreeable automatic extensions, with Secuprint, enabling a smooth transition for DPI's customers."

Oilex to offer stock

Oilex plans to offer A$10.07 million of its common stock through a private placement.

The company is offering 43.8 million shares at A$0.23 apiece. Oilex common stock (ASX: OEX) closed unchanged at A$0.255 on Monday. Oilex has a market capitalization of A$33.7 million.

The shares will be sold in two tranches. The initial tranche will comprise 19.8 million shares, while the second tranche will be made up of the remaining 24 million shares.

Proceeds will be used in progressing the company's oil and gas activities and ongoing working capital requirements. In a press release, the company said it aims to become cash flow positive in 2009.

Oilex is a resource exploration company based in West Perth, Australia.

Beacon Power to raise $4.48 million

Beacon Power has received commitments for $4.48 million of stock and warrant units in a registered private offering.

The company will sell about 8.97 million units at $0.50 per unit. Each unit consists of one common share and one warrant, with each warrant exercisable at $0.74 for five years.

Common shares of Beacon Power (Nasdaq: BCON), a $52.67 million market capitalization company, ended Monday at $0.54, down by 19.4% or 13 cents.

Proceeds will be used to fund operations, including flywheel manufacturing and the continued development of Beacon's frequency regulation facility in New England.

Beacon Power is a Wilmington, Mass.-based developer of products and services for electric grid operations.

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