Reed's raises another $4.3 million from unit offering; Bakers secures $4 million

By Sheri Kasprzak

New York, June 19 - Beverage and ice cream maker Reed's Inc. scooped up another $4.3 million from its previously announced private placement, bringing to $8.971 million the proceeds raised in the offering.

News of the latest tranche closing sent the company's stock jumping by 11.85%, or 80 cents, to close at $7.55 (OTCBB: REED) with volume shooting up as well. There were 64,172 shares traded on Tuesday compared with the average 18,142 shares.

In the most recent closing, the company issued 716,667 units at $6.00 apiece.

The units consist of one share and one warrant with each warrant exercisable at $7.50 for five years.

The company sold 778,500 units in the first tranche, which closed on June 4.

APS Financial Corp. was the lead agent.

Proceeds will be used for working capital and general corporate purposes.

"We are thrilled by the level of interest the capital markets have demonstrated in Reed's," said the company's chief executive officer, Christopher Reed, in a statement.

"We believe the interest is indicative of the strong growth prospects for the Reed's brand as we continue to generate increased brand awareness through marketing programs and additional points of distribution. The additional financing will allow us to further accelerate our product portfolio, launching additional product categories and expanding points of distribution beyond natural food accounts to the mainstream marketplace."

Los Angeles-based Reed's develops a line of ice creams, candies and non-alcoholic beverages.

Stocks do little to stop volume

Meanwhile, in the broader market, sellside sources said a little-moved stock market didn't really impact PIPE volume on Tuesday.

"We seem to be doing OK," responded one market source when asked about the movement of stocks and the impact on offerings. "I don't think it's really making much of a difference. We're seeing a pretty broad range [of sectors]."

Another sellsider, focused on tech and biotech offerings, said he has also seen a healthy number of deals recently.

"In terms of stocks, I'm not seeing anything that's really hurting us at all," he said.

On Tuesday, the Dow Jones Industrial average edged up 22.44 to close at 13,635.42 and the Nasdaq composite index gained 0.16 to end at 2,626.76. The Standard & Poor's 500 composite index climbed by 2.65 to settle at 1,533.70.

Bakers raises $4 million

In other news, Bakers Footwear Group, Inc. penned a $4 million agreement for 9.5% subordinated convertible debentures.

The debentures, due June 30, 2012, are convertible at $9.00 each, an 8.4% premium to the company's $8.30 closing stock price on Monday.

The company's stock got off to a rocky start, losing 8.43%, or 70 cents, by 9:48 a.m. ET. The stock went on to dive by 13.25%, or $1.10, to close at $7.20 (Nasdaq: BKRS).

"We are pleased to announce this debt placement, which enables us to reduce the balance on our senior revolving credit facility, increase the availability of funds under that facility, provide increased working capital and increase our financial flexibility to continue to execute our growth plans," said Peter Edison, the company's CEO, in a news release.

The offering is expected to close within two weeks.

Bakers last tapped the PIPE market in April 2005 when the company sold 1 million shares to six institutional investors for $8.75 million in proceeds.

Based in St. Louis, Bakers is a footwear retailer.

Somerset stock sinks after deal

After announcing the completion of a $2.7 million offering of convertible debentures with Dutchess Private Equities Fund, Ltd., Somerset International Group, Inc. watched its stock tumble by more than 30%.

The stock gave up 5 cents, or 33.33%, to end the session at $0.10 (OTCBB: SOSI).

In the placement, the company issued 12% debentures with a five-year term. The conversion terms were unavailable Tuesday.

Dutchess also received warrants for 13.5 million shares, exercisable at $0.12 each for five years.

Proceeds will be used for growth.

"This latest financing strengthens our working capital and enables us to complete our previously announced acquisition of a company that specializes in the distribution, sale, installation and maintenance of commercial fire and security equipment," said John X. Adiletta, the company's CEO, in a statement.

"We are excited about this acquisition for a number of reasons. Foremost, the company to be acquired provides security services that complement our first portfolio company, Secure System, Inc., and should allow for attractive cross-selling opportunities. Second, this company has an established customer base with over $2.75 million of trailing 12-month revenues, attractive margins and strong cash flow.

"Lastly, this acquisition will be immediately accretive to earnings and further illustrates our ability to identify and acquire undervalued companies with the security services market."

Based in Bedminster, N.J., Somerset International acquires profitable and near-term profitable private small- and mid-sized businesses in the security products and solutions sector.

Lexicon stock slips

A day after announcing a $154.35 million stock agreement, Lexicon Pharmaceuticals, Inc.'s stock dipped by 2.7%.

The stock gave up 9 cents on Tuesday to close at $3.23, losing another penny in after-hours trading (Nasdaq: LXRX).

On Monday, when the deal was announced, the stock gained 7.8%, or 24 cents, to end at $3.32, losing 5.75 cents after hours.

In the placement, the company plans to sell shares at $4.50 each to The Invus Group, LLC. The share price is a 46% premium to the company's $3.08 closing stock price on Friday.

Invus has the option to buy up to $345 million in additional shares over four years.

The offering is part of Invus' plan to move into the pharmaceutical arena.

The deal will bring Invus' ownership of Lexicon to 40% of the post-transaction outstanding common stock.

The transaction will be submitted for approval to the shareholders in August or September.

Connected to the offering, Lexicon announced plans to enter into a $60 million product-development collaboration with Symphony Capital Partners, LP. The plan will help move Lexicon's first three drug candidates into advanced clinical development. Those candidates include LX6171 for cognitive disorders, LX1031 for irritable bowel syndrome and LX1032 for gastrointestinal disorders.

Located in The Woodlands, Texas, Lexicon develops treatments for human diseases.

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