Sterling seeks $730 million; Achillion to raise nearly $50 million; Far East heralds placement

By Stephanie N. Rotondo

Portland, Ore., Aug. 20 - There were several larger-sized deals in the PIPE market on Friday, including transactions from Sterling Financial Corp., Achillion Pharmaceuticals Inc. and Far East Energy Corp.

Sterling announced a $730 million private placement of equity, including common and preferred shares. Under the terms of the financing, funds associated with Thomas H. Lee Partners LP and Warburg Pincus Private Equity X LP will increase their stake in the bank holding company.

Achillion meantime said it would raise nearly $50 million via a private placement of stock. One analyst noted that while the funding will allow the company to focus on developing its drug candidates, it might have also angered some existing investors.

And, Far East said it was conducting a registered direct offering of equity for up to $49.62 million in proceeds. The funds will be used for drilling and development.

Away from the big deals, ActiveCare Inc. launched a $7.5 million private placement of stock. The deal is bringing in new European investors.

ComWest Enterprise Corp. pocketed C$6 million from a private placement of units. The funds were used for a planned acquisition.

Also, Sama Resources Inc. upsized a previously announced private placement of units. The company is now looking to raise C$3 million.

Sterling to get $730 million

Sterling Financial, a Spokane, Wash.-based bank holding company, detailed its plan to raise $730 million via a private placement of common and preferred stock in a regulatory filing.

Thomas H. Lee Partners, LP and Warburg Pincus Private Equity X, LP, as well as 30 other investors, are participating in the financing.

The deal priced Aug. 19.

Sterling is selling a total of 292 million common shares at $0.20 each, for proceeds of $58.4 million. The price per share reflects a 69.23% discount to the Aug. 18 closing share price of $0.65.

Of the common shares to be issues, Thomas H. Lee and Warburg Pincus are subscribing for approximately 68.37 million each. Those investors will also receive warrants for additional shares of common stock.

Sterling is also selling series B convertible participating preferred stock and series D convertible participating voting preferred stock. Each preferred will be sold at $92.00 each.

Thomas H. Lee and Warburg Pincus are purchasing $314.48 million of the series B shares, while a group of 30 other investors are buying $357.12 million of the series D preferreds.

"This commitment of $730 million in new capital represents a major milestone in our recovery plan, and one that will substantially strengthen our capital ratios and provide a solid base for rebuilding long-term franchise value," stated Greg Seibly, president and chief executive officer, in a press release.

Settlement is expected by Aug. 26.

Sterling's stock (Nasdaq: STSA) gained 2 cents, or 2.97%, to $0.66. Market capitalization is $34.39 million.

Achillion to raise nearly $50 million

Achillion Pharmaceuticals is seeking $49.19 million from a private placement of common stock, according to a regulatory filing.

Domain Associates, Clarus Ventures, Quaker BioVentures and Pappas Ventures are the participating investors.

The deal priced Aug. 18.

The New Haven, Conn.-based biopharmaceutical company is selling approximately 19.76 million common shares at $2.49 each. Investors will also receive warrants for 0.35 shares.

Each whole warrant is exercisable at $33.1125 for seven years, representing a 23.51% premium over the Aug. 17 closing share price of $2.52.

"We believe this financing gives us the resources to meaningfully advance our portfolio of clinical candidates for chronic HCV infection to significant milestones," said Michael Kishbauch, president and CEO, in a press release.

Still, one market watcher said he had "mixed" feelings about the deal.

Brian Skorney, an analyst with Thinkequity LLC, told Prospect News that the financing should give the company two years of funding, allowing it to focus on its drug candidate development.

"In that respect, it's stabilized their stock price," he said.

Skorney added that the large amount sought was also a coup as "small biotech companies have real problems raising money in this market."

But Skorney also said that the deal could "alienate" existing investors, given that the participating investors are venture capitalists that will likely not sell their holdings in the open market. And, their investment reduces the stake of other investors.

"I think there is some anger in the investor base because such drastic measures were taken without informing them," he said.

Settlement is expected Aug. 20.

Achillion's equity (Nasdaq: ACHN) dropped 2 cents, or 0.77%, to $2.58. Market capitalization is $99.45 million.

Far East heralds direct placement

Far East Energy plans a registered direct offering of equity for up to $49.62 million.

The company is issuing approximately 150,375,000 common shares at $0.33 per share. The price per share is an 8.33% discount to the Aug. 19 closing share price of $0.36.

"We intend to use the net proceeds from the offering to continue the drilling, completion and testing of our coalbed methane wells in China and for general corporate purposes," said Michael R. McElwrath, CEO, in a press release.

"We are particularly pleased with the quality of the investor group, which consists primarily of several large, fundamental, long-only mutual funds, with exceptional reputations in the investment and energy communities."

Settlement is expected by Aug. 24.

Far East's shares (OTCBB: FEEC) improved by 2 cents, or 5.63%, to $0.38. Market capitalization is $69.6 million.

Far East Energy is a Houston-based natural gas company focused on coal-bed methane projects.

ActiveCare secures European investors

ActiveCare intends to raise $7.5 million from a private placement of common shares, according to a regulatory filing and subsequent press release.

A European consortium of institutional investors are participating in the financing.

It is expected that ActiveCare will raise $2.5 million within the next 30 days.

The West Valley City, Utah-based company will sell the stock at $0.75 per share, a 1.32% discount to the Auf. 19 closing share price of $0.76.

Under the terms of the deal, ActiveCare's preferred shareholders will be required to convert their holding into common stock at $1.00 per share and that any warrants they hold be re-priced at $1.00 as well.

"With the initial funding complete the company will have the capital necessary to perform on its business plan and fulfill orders for its products and services," the company said in a press release. "In addition, the arrangement with the preferred shareholders will eliminate a $2 million liability associated with a mandatory redemption provision imbedded in the preferred shares."

"This funding commitment will allow the company to achieve its goals and projections and allows ActiveCare to implement its marketing and manufacturing requirements for more than 5,000 members," stated James Dalton, president, in the release.

ActiveCare's equity (OTCBB: ACAR) firmed by 34 cents, or 44.74%, to $1.10. Market capitalization is $15.35 million.

ActiveCare is a telematic and biosensor technology company.

ComWest takes in C$6 million

ComWest Enterprise, a New Westminster, B.C.-based company, settled a C$6 million private placement of units, the company said in a press release.

ComWest sold 1 million of the units at C$6.00 each. The units contained one class B voting common share and one warrant.

The warrants are exercisable for a convertible preferred share, pending shareholder approval. If approval is not secured, the warrants are exercisable for 10 class A non-voting shares.

Additionally, the company said it had completed its 90% acquisition of Peerless Garments LP.

The company did not return calls seeking comment.

ComWest's shares (TSX Venture: CWP) were unchanged at C$0.18. Market capitalization is C$226,242.

Sama lifts unit sale

Sama Resources said it had increased a previously announced private placement of units to C$3 million from C$2 million.

The deal was announced July 2 and priced Aug .5.

The Vancouver, B.C.-based company now intends to sell 7.5 million of the units at C$0.40 each. The units will contain one common share and one half-share warrant.

Whole warrants are exercisable at C$0.55, a 25% premium over the Aug. 4 closing share price of C$0.44.

Proceeds will be used for exploration and development of the Samapleu nickel/copper project and for working capital purposes.

Sama's stock (TSX Venture: SME) increased by 2½ cents, or 5.56%, to C$0.475. Market capitalization is C$20.98 million.

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