Smith & Wesson arms itself with $80 million from note sale; Youbet.com gambles on $20.15 million PIPE

By Sheri Kasprzak

New York, Dec. 18 - Smith & Wesson Holding Corp., the handgun manufacturer, led PIPE news Monday with an $80 million convertible note offering.

This is the second time in as many years the firearms company has hit the private placement market for capital.

Back in September 2005, the company sealed a $26.16 million private placement of 6 million shares at $4.36 each.

This time, the company sold 4% notes due 2026. The notes are convertible into common shares at $12.34 each, a 20% premium to the company's $10.28 closing stock price on Thursday.

Of the investors in the most recent offering, Portside Growth & Opportunity Fund; Cranshire Capital LP; Kings Road Investments, Ltd.; Capital Ventures International; and Iroquois Master Fund Ltd. are all returning investors from the September offering.

Cowen and Co., LLC and Merriman Curhan Ford & Co. were the placement agents for the most recent deal.

At the end of the day Monday, the company's stock had edged up 9 cents to close at $10.36 (Nasdaq: SWHC).

Smith & Wesson is based out of Springfield, Mass.

Meanwhile, in the broader market, sellsiders said that as the Christmas holiday looms and with Hanukkah already underway, PIPE volume may start to die off slowly.

"We're getting close to that time of year when people are taking off for the holidays and putting it aside until next year," said one sellsider based in New York. "You also have a lot of companies doing year-end stuff and nothing's really getting planned in terms of financings. Everything that is going to get done has most likely been done."

Another sellsider, this one based on the West Coast, agreed.

"That's pretty accurate," he said. "It comes in cycles like this. We tend to get more [volume] near the end of the year and then we probably won't see a huge jump until the spring. If you want my prediction, the first couple of months of 2007 will be light."

Youbet's $20.15 million deal

Elsewhere in specific offerings, Youbet.com, Inc.'s stock gave up more than 5% on Monday after the company said it is gearing up to settle a $20.15 million registered direct placement of its stock.

The stock sank by 18 cents, or 5.17%, to close at $3.30 (Nasdaq: UBET).

The company intends to sell 6.2 million shares in the deal at $3.25 each, an 8.7% discount to its $3.56 closing stock price from Wednesday.

The offering is scheduled to wrap up on Wednesday, and the shares will be sold under the company's shelf registration.

Proceeds will be used to repay $10.2 million in promissory notes issued as part of the company's acquisition of United Tote in February. The rest will be used for general corporate purposes.

ThinkEquity Partners LLC was the placement agent.

Youbet, based in Woodland Hills, Calif., provides internet and telephone platform technologies for wagering on horse races.

RegeneRx to raise $9.55 million

Looking to the biotech sector, RegeneRx Biopharmaceuticals, Inc. led light activity there with word that it plans to close a $9.55 million stock sale.

The company hopes to issue 5,305,557 shares at $1.80 each on Thursday to an investment group that includes Sigma-Tau Group, its largest shareholder. The shares are being sold at a 24.3% discount to the company's $2.38 closing stock price on Friday.

Still, one buysider familiar with the company said he likes RegeneRx.

"They have a lot of solid products coming up and I think they're a decent company overall," he said. "It's a shame they had to sell at that level but sometimes you have to do what you have to do to make money. The warrants look good though so I think they'll be all right."

The investors will also come away with warrants for 2,122,222 shares, exercisable at $2.75 each.

Despite the optimism of the buysider, RegeneRx watched its stock tank on Monday, giving up almost 16%, or 38 cents, to settle at $2.00 (Nasdaq: RGN).

Piper Jaffray & Co. was the placement agent.

Proceeds will be used for clinical development of the company's Thymosin beta 4 technology platform to promote cell regeneration in the skin.

"We are pleased that several of our existing institutional investors participated in this financing, including Sigma-Tau, as well as a number of new institutions," said J.J. Finkelstein, the company's chief executive officer, in a news release. "With this transaction, we believe our financial resources should be sufficient to complete our current phase 2 program with ample time for potential strategic discussions and allow us to commence planning for phase 3, including the initiation of long lead-time activities."

RegeneRx completed a similar direct offering back in March for $7,283,385 in proceeds. The company sold shares at $2.81 apiece, a 14.8% discount to the company's March 3 closing stock price. On March 6, when the deal settled, the company's stock gave up 15 cent to close at $3.15.

Based in Bethesda, Md., RegeneRx develops molecules used to repair tissue and organs.

NovaDel stock rises; Enzo drops

After announcing its plans to close a $14,244,775 direct placement of stock, NovaDel Pharma Inc.'s stock rebounded slightly, edging up a penny on Monday.

The stock gained 0.66% to end at $1.53 (Nasdaq: NVD) after giving up 6 cents, or 3.85% on Friday to close at $1.52.

In the deal, the company plans to sell shares at $1.45 each. The deal is set to close Dec. 29.

NovaDel, based in Flemington, N.J., develops novel drug delivery systems for prescription and over-the-counter drugs.

Meanwhile, Enzo Biochem, Inc., which also announced a registered direct placement of its stock on Friday, saw its stock slip by 5 cents on Monday.

The stock settled down 0.35% to end at $14.15 (Nasdaq: ENZ). On Friday, when the deal was announced, the stock closed down $1.10 to end at $14.20.

The company plans to sell shares at $14.00 each, an 8.5% discount to the company's $15.30 closing stock price on Thursday.

The shares will be sold under the company's shelf registration, and the deal is set to close Dec. 20.

Lazard Capital Markets LLC was the placement agent.

New York-based Enzo develops labeling and detection products for gene sequencing and genetic analysis.

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