Holly Energy raises $45.1 million; volume remains steady as stocks rise, oil dips

By Sheri Kasprzak

New York, July 11 - PIPE volume remained robust Monday as stocks made some gains, pushed by dropping oil prices, sell-siders said.

Dallas-based Holly Energy Partners, LP led private placement news as the week kicked off with word that it wrapped up a $45.1 million unit offering.

The company sold 1.1 million units at $41 each to institutional investors to fund its previously announced acquisition of a feedstock pipeline from Holly Corp.

The pipeline connects Holly Corp.'s Lovington, N.M., and Artesia, N.M., refining facilities and was paid for mostly from this offering and a $35 million note deal closed recently. The total cash cost was $77.7 million and Holly Energy also issued 70,000 in common units and a capital account credit to maintain Holly Corp.'s general partner interest in Holly Energy.

Holly Energy is a refined petroleum product transportation and terminal services company. Holly Corp. is a petroleum refining company.

The deal was originally announced in mid-June at $35 million.

On Monday, the company's stock closed down $0.08 at $43.18.

In the broader market, stocks climbed and oil dropped - two things one sell-sider said are key to solid volume in the private placement market.

"When oil goes down, many times stocks get a boost and when stocks get a boost, you tend to see more issuers, especially ones that have been sitting on their hands waiting to do a deal, finally come out with it," said that sell-sider.

"We're seeing a pretty steady flow," said another market source. "A lot of healthcare deals I've seen, some pretty big ones. Stocks didn't really do that much today, so I'm not really sure where the load is coming from."

The Dow climbed 70.58 to close at 10,519.72, the Nasdaq composite index gained 22.55 to end at 2,135.43 and the S&P 500 edged up 7.58 to close at 1,219.44.

Oil, on the other hand, sank with the passing of Hurricane Dennis, losing $0.71 to end at $58.92 per barrel.

Tegal closes $22.5 million deal

Moving to the tech sector, Tegal Corp. said Monday it has secured agreements for a $22.5 million stock offering.

The company plans to sell 34,615,385 shares at $0.65 each.

The investors will also receive warrants for a total of 17,307,392 shares, exercisable at $1 each for five years.

Based in Petaluma, Calif., Tegal designs plasma etch and deposition systems for the nanotechnology industry.

Tegal's stock closed down $0.02 at $0.92 Monday.

Fusion funds three similar deals

Three equity line offering were announced Monday, all from Fusion Capital Fund II, LLC.

The equity lines, according to one sell-sider who was not involved in any of the transactions, may be a valuable source of capital for companies with less-than-stellar stock performances.

"It's rare to see a structure like those," said that source. "But I've a feeling that those issuers had some problems with their stock and looked to an investor who could actually come up with something to make that not such a big issue in the short term."

The largest of the equity lines was made to Philadelphia-based Hemispherx Biopharma, Inc., which obtained a commitment for up to $20 million.

Fusion may buy shares of Hemispherx over the course of 25 months at a price equal to the lesser of the lowest trade price of the company's stock the date of a draw or the average of the three lowest closing trade prices in the 12 trading-day period before a draw.

The proceeds will be used to extend the company's New Brunswick production facility for Ampligen and Alferon injections. The remainder will be used for general corporate purposes.

Hemispherx is a biopharmaceutical company that develops RNA-based treatments for chronic fatigue syndrome, HIV and other disorders.

Hemispherx's stock closed down a nickel to end at $1.81 on Monday.

A similar size equity line was entered into with HepaLife Technologies, Inc., a Vancouver, B.C.-based biotech company focused on liver dysfunction.

Under the terms of that agreement, Fusion will buy shares, based upon the current market price, for up to 30 months. The shares may be bought in $500,000 monthly installments.

After the equity line was announced Monday morning, the company's stock gained $0.19, or 10.5%, to close at $2 Monday.

"Fusion's unique and innovative financing commitment will allow our company to raise a significant amount of capital efficiently and on a cost-effective basis from a single institutional investor," said Harmel Rayat, one of HepaLife's directors, in a statement. "With the added capital, our management team can focus on HepaLife's core research activities, expanding and accelerating the scope of our science and working towards creating the first-of-its-kind artificial liver device and developing proprietary in-vitro toxicology and pre-clinical drug-testing platforms."

Rayat is the connection to the final equity line offering from Fusion. He is a director for both HepaLife and PhytoMedical Technologies, Inc., which will receive up to $10 million from Fusion.

Under those terms, Fusion will buy shares at the current market price for up to 25 months in increments of $400,000 monthly.

"Now our management team can focus on PhytoMedical's core research activities, expanding and accelerating the scope of our science and working towards developing clinically approved products for two of the most devastating disease states in America - diabetes and cachexia," Rayat said in a separate statement.

Based in Vancouver, B.C., PhytoMedical is a biopharmaceutical company focused on plant-derived treatments for cachexia, obesity and diabetes.

PhytoMedical's stock slipped $0.02 to close at $0.87.

MTM raises $4 million

Stamford, Conn.-based internet technology networking company MTM Technologies, Inc. secured an extra $4 million from a previously conducted preferred stock offering.

The company sold 1,230,769 shares of series A-4 preferred stock at $3.25 each to two institutional investors.

The preferreds are convertible into common shares at $3.25 each.

The investors received warrants for 246,152 shares, exercisable at $4.06 each.

The closing is in addition to the $5.05 million the company announced it had raised from the offering on Friday.

"To date, the combined investment in the company by Pequot Ventures and Constellation Ventures is $50 million," said Francis Alfano, MTM's chief executive officer, in a statement. "We have an active pipeline of potential acquisition targets to support our strategy of acquiring solutions-oriented IT providers. As we increase our revenue and the scale of our operations, we expect to leverage our existing corporate overhead to drive positive EBITDA contribution from our acquisitions."

On Monday, the company's stock closed unchanged at $3.45.

New Century Energy's stock closes up

New Century Energy Corp.'s stock climbed Monday after wrapping a $15 million private placement on Friday.

The company's stock gained $0.04, or 11.11%, to end at $0.40 Monday.

On Friday, when the offering was first announced, the company's stock remained unchanged at $0.36.

New Century issued a convertible term note with a conversion price at $0.62.

"It looks like it went well for them," said one market source familiar with natural resources stocks.

That market source said on Friday that the offering had been priced in line and a recent drop in oil prices force the company's stock down. The gains, the source said on Monday, can be attributed to the closed note offering.

New Century is a Houston-based oil and natural gas exploration company.

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