nFinanSe settles $9.07 million offering; Silverstar secures $9 million from stock sale

By Sheri Kasprzak

New York, July 3 - Despite an explosion in PIPE volume on Monday, Tuesday's volume tapered off ahead of the Fourth of July holiday in the United States. Even so, insiders said the market is ripe for new offerings and activity is likely to pick up again on Thursday.

"A momentary blip," said one market source of the stall in volume on Tuesday. "By Thursday, things will start up again and you'll probably be seeing more tech and biotech."

"People are away this week," added another sellsider. "I don't think it has anything to do with whether investors are looking at the [PIPE] market. Once the holiday is over, it [volume] will improve."

The slim pickings on Tuesday were led by a $9,069,597 private placement of series B convertible preferred stock and common stock from nFinanSe Inc.

The company sold 2,023,199 common shares at $3.00 each and 1 million shares of series B preferred stock.

Each preferred is convertible into common shares at $3.00 each.

The investors also received warrants for 1,511,600 shares, exercisable at $5.00 each for five years.

"We are gratified with the investors' confidence in our company that this transaction signifies," said Raymond Springer, the company's chief financial officer, in a news release.

"This investment significantly strengthens our balance sheet and provides the necessary capital to execute our business plan."

The company's stock fell by 4.41%, or 15 cents, on Tuesday to end at $3.25 (OTCBB: NFSE).

Based in Bradenton, Fla., nFinanSe is a financial services company and provides stored value and prepaid cards.

Silverstar to raise $9 million

Moving elsewhere in the PIPE market Tuesday, Silverstar Holdings, Ltd. announced its plans to close an $8,999,990 private placement of stock.

News of the deal, announced Tuesday morning, sent the company's stock diving by 16.4%, or 30 cents, to end the shortened session at $1.58 (Nasdaq: SSTR).

The company intends to sell to a group of institutional investors and members of its management 6,206,890 shares at $1.45 each. The price per share is a 23.4% discount to the company's $1.89 closing stock price on Monday.

The investors also will receive warrants for 4,344,826 shares, each exercisable at $2.10 for five years.

The offering requires the approval of the company's shareholders as the issuance is above 19.99% of the outstanding common stock.

In October 2006, Silverstar closed a $1.4 million offering of variable-rate secured convertible debentures with DKR SoundShore Oasis Holding Fund Ltd. The debentures are due Oct. 31, 2008 and are convertible into common shares at $1.738 each.

Silverstar, based in Boca Raton, Fla., acquires controlling positions in fee-based electronic game businesses.

Wizzard to close offering

In other tech news, Wizzard Software Corp. said it received agreements for a $7.5 million offering of series A convertible preferred stock.

The company plans to issue 7,500 shares of the 7% preferreds at $1,000 each. The preferreds are convertible into common shares at $2.05 each.

The preferreds pay an annual dividend of 7% for the first two years and then at 18% annually thereafter.

The investors also received warrants for 1,829,268 shares, exercisable at $2.85 each for five years.

Canaccord Adams Inc. was the placement agent.

"We greatly appreciate the tremendous vote of confidence in Wizzard that this financing represents from our new institutional investors," said chief executive officer Chris Spencer in a statement.

"This capital infusion allows us to continue funding the growth of our recently announced podcasting acquisitions and will allow us to accelerate the expansion of our overall podcasting efforts, in which we see tremendous potential."

On Tuesday, the company's stock gained 11 cents, or 4.01%, to close at $2.85 (OTCBB: WIZD).

Volume was elevated with 143,635 shares traded compared with the average 57,390 shares.

Wizzard last tapped the PIPE market in October 2006 with a $1.75 million offering of convertible notes.

Those notes, which have an 18-month term, are convertible at $2.00 each.

Pittsburgh-based Wizzard is a podcast hosting network.

Linn stock falls

In secondary market activity, Linn Energy, LLC's stock dipped on Tuesday, a day after the company announced its intention to close a $1.5 billion stock deal as part of its acquisition of oil and gas properties from Dominion Resources, Inc.

The stock fell by 34 cents, or 0.91%, to end the session at $37.01 (Nasdaq: LINE).

On Monday, the stock climbed by 13.49%, or $4.44, to settle at $37.35.

In the placement, a group of institutional investors led by Lehman Brothers MLP Opportunity Fund agreed to buy common units and class D units at a blended price of $31.25 each.

Lehman Brothers Inc., Citigroup Global Markets Inc. and RBC Capital Markets Corp. were the lead agents for the deal.

The company also announced Monday that it expects the acquisition will increase its borrowing base to between $1.6 billion and $1.8 billion from $765 million.

Linn, based in Houston, is an oil and natural gas company focused on developing and acquiring properties.

PlanetOut shares climb again

In other secondary market news, PlanetOut, Inc.'s share price continued to rise on Tuesday after the company announced the pending completion of a $26.22 million stock deal.

The stock gained 7 cents, or 4.4%, to end at $1.66 (Nasdaq: LGBT). On Monday, the stock jumped by 15.22%, or 21 cents, to settle at $1.59 after getting an early jump of more than 24%.

The investors, including Special Situations Fund; Cascade Investment, LLC; SF Capital Partners; PAR Investment Partners LP; and Allen & Co. LLC, agreed to buy shares at $1.15 each.

Allen & Co. LLC was the placement agent.

The offering is expected to close on Friday.

San Francisco-based PlanetOut is an entertainment company focused on providing products and services to the lesbian, gay, bisexual and transgendered community.

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