PIPEs struggle from shaky stocks; First Republic Bank prices $25 million stock offering

By Sheri Kasprzak

New York, Aug. 15 - Even though all of the major stock indexes rebounded from earlier dips, private placement volume remained sluggish on Monday.

"Not much to report," proclaimed one sellside source. "Off to a slow start it seems."

Another sell-sider explained that stocks ended off on Friday, which had an impact on deals that may have been slated for pricing on Monday.

"Once everything got rolling, you look at stocks in the morning to find they're still kind of trending down," he said. "It should improve somewhat tomorrow because things did end on a better note today, but there was really nothing much going on today."

The Dow rebounded from its early losses to gain 34.07 and close at 10,634.38; the Nasdaq composite index ended up 10.14 at 2,167.04, and the S&P 500 closed up 3.48 at 1,233.87.

Heading up private placement news in the United States was a $25 million stock offering from San Francisco's First Republic Bank.

The private bank and wealth management firm announced its plans to sell 660,000 shares at $37.88 each through underwriter HSBC Securities Inc.

The proceeds will be used for general corporate purposes.

After the offering was announced Monday afternoon, the company's stock gained $0.82 to finish at $37.98.

For the second quarter of 2005, First Republic reported on July 20 a net income of $12,746,000, compared to $10,272,000 for the same quarter in 2004. For the second quarter, the company's diluted earnings per share were $0.50, up 22% from the corresponding quarter in 2004.

According to the bank's annual report from 2004, the company had net income of $42,543,000 compared to $37,050,000 for 2003.

Germany's BKN raises $7 million

Cologne, Germany-based BKN International AG, a company that produces animated children's programs, closed a $7 million convertible bond offering Monday, the company reported.

Laurus Funds bought the bonds, which mature in August 2010 and bear interest at Prime rate plus 100 basis points.

The bonds are convertible into common shares at €4.50 each.

Laurus also received warrants for 20% of the shares issuable upon conversion at €5.00 each.

Proceeds from the deal will be used for film production in 2006 and 2007. The rest will be used for investments in China and India.

"These bonds provide the company with the liquidity to meet all of our strategic requirements for the medium term, at which point the business is expected to be self-financing," said Wayne Mowat, the company's chief financial officer, in a statement. "As stated at the half year, the visibility over the next 18 to 24 months is good and the outlook for BKN continues to be strong."

The company's stock lost €0.01 to close at €4.08 after making early gains when the closing was reported in the United States Monday morning.

Caribou leads Canadians

In Canada, Calgary, Alta.-based oil and natural gas exploration company Caribou Resources Corp. led private placement news with the pricing of its C$13 million offering.

The company plans to sell 3,278,690 flow-through shares at C$3.05 each and 1,224,491 units at C$2.45 each.

The units are comprised of one share and one half-share warrant, the whole of which is exercisable at C$3.00 each for one year.

A syndicate of underwriters led by Dundee Securities Corp. has an over-allotment option for up to 327,869 additional flow-through shares and up to 408,164 additional units.

Caribou's stock slipped C$0.11 to close at C$2.31 Monday.

The proceeds will be used to reduce debt and to finance the company's 2005 capital program. The remainder will be used for the 2006 exploration and development program.

Even though oil prices took a hit on Monday, dropping $1.36 to close at $65.50 per barrel, one market source based in Vancouver said prices are still high enough to satisfy the pricing needs of companies that are ready to tap into the PIPE market.

"If some energy company needs to do a PIPE in order to fund some project or another, I don't think some dip as comparatively small as the one we had today is going to impact them," he said. "Still, we're only seeing a handful, so I think there maybe just isn't as much demand [for capital]."

Another oil offering in the pipeline Monday was a C$4 million deal from another Calgary-based company, G2 Resources Inc.

The offering includes 10 million units at C$0.40 each.

The units consist of one class A share and one half-share warrant. The whole warrants allow for the purchase of another class A share at C$0.50 each through March 31, 2006.

Placement agents Acumen Capital Finance Partners Ltd. and Pacific International Securities Inc. have an over-allotment option for an additional 2.5 million units.

Proceeds from the deal will be used for the company's capital expenditure program and for general corporate purposes.

G2 said in a statement Monday that its stock will begin trading on the Toronto Stock Exchange's Venture Exchange Tuesday.

Allon raises C$6.2 million

Heading away from natural resources and into biotech, Vancouver, B.C.'s Allon Therapeutics Inc. settled a private placement for C$6.2 million.

The company issued 5,904,762 shares at C$1.05 each.

Proceeds will be used for ongoing clinical development of two products - AL-108 to treat Alzheimer's disease and AL-208 to treat mild cognitive impairment associated with cardiac artery bypass graft surgery.

"This financing is important because it allows Allon to accelerate the clinical development momentum built over the last year," said Gordon McCauley, the company's president and chief executive officer, in a statement. "We are now in the enviable position of having the financing resources to undertake the phase IIa clinical trials for both our lead products and increasing our opportunities to demonstrate with this class of compounds."

Allon develops therapeutic products to treat neurodegenerative disorders like Alzheimer's diseases, stroke, traumatic brain injury, multiple sclerosis and neuropathy.

The company's stock closed unchanged at C$0.95 Monday.

NRG's stock settles down

NRG Energy Inc.'s stock fell on Monday after making gains Friday on the closing of a $250 million private placement.

The company's stock dropped $0.48 Monday to close at $38.45.

On Friday, NRG's stock gained $0.57 to close at $38.93 after losing $1.03 on Thursday when the private placement closed to end at $38.36.

NRG closed a $250 million convertible preferred stock offering on Thursday, selling the preferreds at $1,000 each.

The preferreds are convertible into common shares at the greater of the difference between the closing sale price of the company's stock on each of 20 consecutive trading days, beginning the 30 days immediately before conversion and $59.085.

The Princeton, N.J.-based power-generation facility operator plans to use the proceeds to redeem $228.75 million in principal of its outstanding 8% notes. The remainder of the proceeds will be used for general corporate purposes.

Uranium Resources' stock closes up

After wrapping a $12 million stock deal on Friday, Uranium Resources, Inc.'s stock made gains on Monday.

The company's stock gained $0.04 to end at $0.69.

On Friday, when the offering closed, the company's stock gained 8.33%, or $0.05, to close at $0.65.

The company sold shares at $0.50 each to funds managed by one of its directors, George Ireland.

Based in Lewisville, Texas, Uranium Resources is a uranium exploration company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.