PIPE volume eases as week ends, stocks dip; Benihana closes $20 million private placement

By Sheri Kasprzak

New York, Aug. 5 - Private placement volume remained weak for the second straight session as stocks continued their downward trend Friday.

There's "not much going on," said one sell-sider of the slowed volume. "Nothing in particular to point to other than stocks being off."

The Dow Jones Industrial Average lost 52.07 to end at 10,558.03; the Nasdaq composite index slipped 13.41 to close at 2,177.91, and the S&P 500 edged down 9.44 to close at 1,226.42.

Volume for the week ahead, in both the United States and Canada, according to one market source in New York, may be made up of several energy offerings since oil prices headed to a new record high on Friday.

"I'd look for them," said the sell-sider. "There's already been a spate of them in Texas this week and last, and this increase [in oil prices] will push them more."

Another source in Canada agreed and noted that more oil offerings from Canada will hit the PIPE market near the beginning of next week.

Oil gained $0.93 to end at $62.31 per barrel Friday.

On to specific offerings, Benihana Inc. closed a private placement that has been more than a year in the works.

The Miami-based Japanese restaurant chain finished the final tranche of the $20 million series B convertible preferred offering for $10 million.

In the second tranche, the company sold 400,000 of the preferreds at $25 each to BFC Financial Corp.

The preferreds are convertible into common shares at $19 each and pay annual dividends at 5%.

The first tranche closed on July 1, 2004 for the same amount and under the same terms.

On Friday, the company's stock closed unchanged at $20.00.

According to the company's annual report released on June 24, the company had 2,956,479 outstanding common shares and 6,288,255 outstanding class A common shares as of June 7.

The company's first-quarter earnings report, released on July 25, indicates a 13.5% increase in sales to $73.7 million from the corresponding period in 2004.

Integrated Security raises $4 million

Over in the technology sector, Integrated Security Systems, Inc. has closed a $4 million note offering with Laurus Master Fund, Ltd.

Laurus bought a $3 million revolving note and a $1 million secured convertible minimum borrowing note.

Both notes mature on July 29, 2008, bear interest at Primerate plus 150 basis points and are initially convertible into common shares at $0.25 each.

Laurus received a warrant for 1,723,077 shares, exercisable at $0.325 each for the first 923,077 shares and at $0.375 each for the remaining 800,000 shares. The warrant expires on July 29, 2012.

The Irving, Texas-based security systems company posted net losses of $1,155,304 for the quarter ended March 31, compared to a net loss of $1,018,510 for the corresponding quarter in 2004.

The company's stock remained unchanged at $0.22 Friday.

SpatiaLight's $2.7 million direct deal

Moving away from the private placements, SpatiaLight, Inc. has closed a $2.7 million direct offering with institutional investors.

Novato, Calif.-based SpatiaLight, which makes liquid crystal on silicon microdisplays used in high-definition televisions, issued 500,000 shares at $5.40 each.

The shares were sold under SpatiaLight's shelf registration.

Those investors have options to buy another 225,000 shares at $5.50 each for 30 days after the deal closes.

All of the investors participated in SpatiaLight's November 2004 senior secured convertible note offering.

"We are rapidly moving forward with mass production of our 1080p LCoS sets to fill anticipated demand from LG Electronics and other potential tier one customers," said the company's senior vice president of marketing, Don Suh, in a statement. "This capital infusion will assist in our important efforts to support LGE's announced launch of high-definition televisions incorporating our LCoS sets in the coming months."

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

SpatiaLight's stock closed down $0.24, almost 4%, to end at $5.77 Friday.

Rainmaker wraps C$19 million deal

Heading up private placement offerings in Canada Friday, Rainmkaer Income Fund has closed a C$19 million trust unit offering as part of its acquisition of EP Canada Inc. and Comweb Film Capital Corp.

The company sold 5,846,155 trust units at C$3.25 each.

After the private placement was announced early Friday afternoon, the company's stock gained C$0.10 to close at C$3.50.

The acquisition of EP and Comweb were completed on Friday for C$18.2 million, and the two companies were changed to limited partnerships. EP Canada is a payroll services company for the film and television sector, and Comweb provides film tax credit administrative services to the sector.

"This is the transaction we have been waiting for," said Rainmaker chairman Hugh McKinnon, in a statement. "It strengthens our operations and provides geographic and service diversity to all clients of Rainmaker LP."

Vancouver, B.C.-based Rainmaker is a holding company for post-production and visual effects companies.

Gold offerings may increase

Even though mineral prices overall fell on Friday, gold prices rose slightly, and one sell-sider said gold companies may get back into the market again in the Aug. 8 next because of the increase.

"Other mining areas are seeing a definite fall," said the Canadian market source. "Gold is up a bit, so there could be some more of those offerings coming up this week."

The surge of mineral offerings from Canada from last month are a thing of the past, this sell-sider said, at least for now.

Carpathian Gold Inc. was one gold exploration company that priced a new private placement Friday.

The Toronto-based company plans to sell up to 11.5 million shares at C$0.10 each for C$1.15 million.

Desjardins Securities Inc. is the placement agent for the deal.

The proceeds will be used for exploration on the company's properties in Romania and for working capital.

On Friday, Carpathian's stock remained unchanged at C$0.12.

Nuvelo stock dips

A day after announcing the closing of a $75 million equity financing with Kingsbridge Capital Ltd., Nuvelo Inc.'s stock slipped.

The company's stock dropped $0.48, or 5.28%, to end at $8.61 Friday.

On Thursday, when the equity line was received, the company's stock lost $0.32 to end at $9.09.

Under the terms of the equity line, the Sunnyvale, Calif.-based biopharmaceutical company may sell shares to Kingsbridge at the greater of $2.50 per share or 85% of the company's share price the day before a draw.

Nuvelo is focused on therapies for cancer and cardiovascular ailments. The proceeds will be used for clinical and corporate development.

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