Chesapeake eyes another $600 million; Sequenom plans issue; Mesoblast gets acquisition funding

By Stephanie N. Rotondo

Portland, Ore., May 12 - More U.S. issuers came to the PIPE market on Wednesday, bringing with them a flurry of double-digit deals - and even a triple-digit financing.

Chesapeake Energy Corp. brought the triple-digit financing, a $600 million private placement of preferred shares. The financing is being done for North American investors and is in addition to the $600 million private placement of the same preferreds to two Asian investors, announced earlier in the week. Both transactions are being conducted to further the company's strategic plan.

Meanwhile, Sequenom Inc. said it was planning a $51.61 million private placement of equity. Proceeds will be used, in part, for clinical trials.

In closed dealings, Mesoblast Ltd. settled an A$37 million private placement of shares. The company intends to use the proceeds to fund a planned acquisition.

Kelly Services Inc. also wrapped a deal, taking in $24.31 million from a private placement of common stock. The stock was sold to a single investor, who is also a strategic partner.

And Noront Resources Ltd. pocketed nearly C$14 million form a private placement of flow-through shares. The company will use the funds for exploration activities.

NanoViricides Inc. announced a $5 million registered direct offering of preferred stock. The company lined up a single investor for the transaction and the investor has an option to increase its investment by another $5 million.

Chesapeake seeks additional dollars

Chesapeake Energy is planning a $600 million private placement of 5¾% cumulative non-voting convertible preferred shares for North American investors.

The financing is in addition to the $600 million private placement announced May 10. In that transaction, the company is also selling 5¾% cumulative non-voting preferred shares to two Asian investors, Maju Investments (Mauritius) Pte Ltd, an affiliate of Temasek Holdings (Private) Limited, and Hampton Asset Holding Ltd., an affiliate of Hopu Investment Management Co, Ltd.

The shares carry a liquidation preference of $1,000 per share. Each share is convertible into approximately 35.7961 common shares, based on an initial conversion price of $27.94 per share. Additionally, the shares are mandatorily convertible after May 17, 2015, at the company's discretion, should the closing price of the stock exceed 130% of the conversion price for 20 trading days in any consecutive 30-day period.

Both financings are being done as part of Chesapeake's strategic plan, according to Jeffrey L. Mobley, investor relations for the company.

In a press release published May 10, Chesapeake outlined its strategic and financial plan "designed to increase shareholder value, reduce debt and ultimately achieve an investment grade rating for the company's debt securities.

"Through a series of transactions over the next 24 months, [including the private placements], the company is planning to raise up to $5.0 billion in order to repay up to $3.5 billion of senior indebtedness and increase its investment in liquids-rich plays by up to $1.5 billion," the company said in the May 10 release.

In addition to the two financings, Chesapeake is also planning to sell a 20% equity interest in its Chesapeake Appalachia LLC subsidiary.

The proceeds raised in the Asian and North American placements will be used to repay outstanding debt. Settlement is expected by May 17.

Chesapeake's stock (NYSE: CHK) gained 32 cents, or 1.37%, to $23.60. Market capitalization is $15.3 million.

Chesapeake Energy is an Oklahoma City-based based independent producer of natural gas.

Sequenom plans stock sale

San Diego-based Sequenom is seeking $51.61 million via a private placement of common stock, according to a press release.

The company will issue approximately 12.43 million of the shares at $4.15 per share.

"Sequenom intends to use the net proceeds from the financing to advance its research, development and commercialization of various diagnostic tests, as well as for general corporate purposes," the company said in the release. Settlement is expected by May 17.

Sequenom's shares (Nasdaq: SQNM) improved by a nickel, or 0.98%, to $5.42. Market capitalization is $332 million.

Sequenom is a life sciences company committed to improving health care through revolutionary genetic analysis solutions.

Mesoblast receives acquisition funds

Mesoblast, a Melbourne, Australia-based adult stem cell company, wrapped an A$37 million private placement of ordinary shares, the company said in a press release.

The company issued the shares at A$1.70 per share, which represented a 12% discount to the stock's closing price as of May 3.

Proceeds from the financing will be used, in part, for Mesoblast's planned acquisition of Angioblast Systems Inc.

"We are delighted to bring the commercial rights to the patented adult stem cell technology platform under one umbrella," remarked Brian Jamieson, chairman, in the release. "With Mesoblast moving to 100% ownership of Angioblast, Mesoblast shareholders will derive much greater potential benefit from product commercialization, and from the broader strategic partnerships or collaborations Mesoblast will now be able to conclude."

Mesoblast's equity (Australia: MSB) closed at A$1.99.

Kelly Services gets $24.31 million

Kelly Services pocketed $24.31 million from a private placement of stock, the company announced.

The deal closed May 11. Temp Holdings Co. Ltd. was the investor.

Kelly issued approximately 1.57 million class A common shares at an average price of $15.42 per share, which was calculated on the previous week's five-day volume weighted average price, according to James Polehna, senior director of investor and public relations.

Polehna explained that Kelly Services and Temp Holdings had previously aligned together in an effort to give Kelly an opportunity to expand into the Asian market. This new investment and alliance is "a furtherance of that strategic alliance," he said in an interview with Prospect News.

The partnership will allow both parties to "offer a broader range of services," he added.

Also, on Wednesday, the Troy, Mich.-based staffing company released its first-quarter earnings, which showed total revenue at $1.1 billion. That was an 8% increase year over year.

Loss per share came to $0.06, versus $0.46 in the same quarter of 2009.

Kelly's shares (Nasdaq: KELYA) rose 48 cents, or 2.93%, to $16.85. Market capitalization is $588 million.

Noront wraps share placement

Toronto-based Noront Resources said it had completed a private placement of flow-through shares, taking in C$13.91 million.

The deal originally priced at C$15 million with a 15% greenshoe on April 19.

Noront sold approximately 7.59 million of the shares at C$1.83 per share.

Proceeds will be used for exploration work at the company's McFauld's Lake project.

The company declined to comment further at this time.

Noront's stock (TSX Venture: NOT) increased 5 cents, or 3.73%, to C$1.39. Market capitalization is C$235 million.

NanoViricides secures investor

NanoViricides will sell $5 million of 10% convertible preferred shares to Seaside 88 LP via a registered direct offering.

The West Haven, Conn.-based biopharmaceutical company will issue 500,000 preferred shares at $10.00 per share. Of the shares sold, 60,000 will be automatically converted into common stock every two weeks following the closing.

Seaside has an option to purchase another $5 million of the shares upon the final conversion.

"We are very pleased to receive financing from Seaside," said Anil R. Diwan, president, in a press release. "Seaside has established a strong reputation of successful investments in bio-pharma companies such as ours."

"This financing positions us for meeting the listing standards of major exchanges," added Eugene Seymour, chief executive officer. "We now have sufficient cash in hand to meet our operating needs for the next eighteen months at the current rate of expenditure."

NanoViricides' equity (OTCBB: NNVC) increased 2 cents, or 0.65%, to $2.34. Market capitalization is $308.01 million.

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