Endologix secures $20.13 million from direct stock deal; Numerex raises $10 million from notes

By Sheri Kasprzak

New York, June 1 - Endologix, Inc. headed up a rather active day for the PIPE market, announcing the pending completion of a $20.13 million direct offering of its stock.

A group of institutional investors agreed to purchase 6.1 million shares of Endologix at $3.30 apiece by Friday. The price per share is an 8.5% discount to the company's May 31 closing stock price of $3.61.

Endologix has 36,538,364 outstanding common shares as of April 20.

The shares are being offered under the company's shelf registration.

Canaccord Adams Inc. is the placement agent.

At the end of the day, the company's stock had gained 7.48%, or 27 cents, to close at $3.88 (Nasdaq: ELGX).

"It looks like a decent deal for them," said one sellside market source. "There is definitely a market for their products and it seems like this might give them a boost. They certainly need it."

According to the company's latest earnings statement, Endologix sustained a net loss of $4.112 million for the quarter ended March 31 compared to a net loss of $3.296 million for the same quarter of 2005.

The proceeds from the placement will be used to accelerate the company's sales force recruitment and expand its marketing efforts in the United States for the Powerlink System, which includes an endovascular graft and delivery system to treat abdominal aortic aneurysm. The rest will be used for working capital.

"This financing enables us to fully execute our national expansion strategy and to achieve our goal of increasing our sales force to 40 to 50 representatives by year-end," said Paul McCormick, Endologix's president and chief executive officer, in a news release from Thursday morning. "Importantly, we believe we now have sufficient capital resources to operate our business to cash-flow positive operations."

Located in Irvine, Calif., Endologix develops minimally invasive treatments for vascular diseases.

Numerex raises $10 million

Elsewhere in PIPE activity Thursday, Numerex Corp. sealed a $10 million private placement of convertible and non-convertible term notes with Laurus Master Fund, Ltd.

Laurus bought a $5 million convertible term note and a $5 million non-convertible term note.

Both notes mature May 30, 2010 and bear interest at 9.75% annually.

The convertible notes are convertible into common shares at $7.91 each.

Numerex has a put right on the notes if its stock exceeds $8.70.

The investor also received warrants for 241,379 shares, exercisable at $7.73 each.

The proceeds will be used to repay debt associated with the company's acquisition of Airdesk Wireless.

Thursday, Numerex's stock gained 15 cents, or 2.04%, to close at $7.30 (Nasdaq: NMRX).

"We are pleased with this round of financing, particularly with the speed in execution and, importantly, with the continued support and confidence expressed by Laurus," said Stratton Nicolaides, Numerex's CEO, in a statement.

"This is the third transaction with Laurus and we have found them to be an excellent partner as we raise funds to grow our business and to better position the company for possible strategic initiatives. We believe that the structure of the transaction offers favorable conversion terms, minimizing the amount of potential dilution, and provides sufficient flexibility in both repayment terms and use of proceeds.

"We intend to fully repay debt resulting from the Airdesk acquisition announced earlier this year and welcome the further strengthening to our balance sheet with the resulting increase to our cash reserves."

Atlanta-based Numerex provides wireless fixed and mobile machine-to-machine solutions, as well as other network services and technologies.

Sovereign pockets $2.4 billion

Over in the banking sector, Sovereign Bancorp, Inc. settled up a $2.4 billion private placement of its stock with Banco Santander Central Hispano SA as part of its acquisition of Independence Community Bank Corp.

Sovereign sold 88,705,123 shares at $27.00 each to Banco Santander. The price per share was a 21% premium to the company's closing stock price of $22.30 on May 31.

The deal closed at the same time as its $3.6 billion acquisition of Independence Community Bank Corp. Under the terms of the acquisition, Sovereign bought the outstanding shares of Independence at $42.00 each.

Sovereign's stock edged up 3 cents Thursday to settle at $22.33 (NYSE: SOV).

The proceeds from the deal were used to help pay for the acquisition.

"These are milestones in Sovereign's history and an exciting time for all of us," said CEO Jay Sidhu, in a news release. "The acquisition of Independence allows us to expand our northeastern footprint and to have a significant presence in the most dynamic banking market in the United States as we seek to grow our core businesses and product lines and to execute our strategy to attract more than our share of the Hispanic markets."

Philadelphia-based Sovereign is the holding company for Sovereign Bank, which operates 800 community banking offices in the northeastern United States.

Storm's C$15.58 million PIPE

Heading to Canada, oil explorer Storm Exploration Inc. closed a C$15.58 million private placement of 1.9 million flow-through shares.

The shares were issued at C$8.20 each.

The deal was placed through a syndicate underwriters led FirstEnergy Capital Corp. Proceeds will be used for exploration activities.

The company's stock gained 10 cents to end the session at C$6.20 (Toronto: SEO).

Calgary, Alta.-based Storm is an oil and natural gas exploration company.

In other resources activity in Canada, PGM Ventures Corp. concluded a private placement for C$15 million.

The company issued 15 million shares in the offering to Investec Bank (UK) Ltd. and Trafigura Beheer BV.

The offering was conducted to build the company's Aguas Tenides mine. The company raised a total of C$70 million in separate placements.

Most recently, the company raised C$25 million from the sale of 6% convertible debentures with Dundee Resources Ltd.

PGM's stock gained 7 cents, or 6.67%, to close at C$1.12 (TSX Venture: PPG).

Toronto-based PGM is a mineral exploration company.

Gentium's stock slips

A day after wrapping a $22,136,750 private placement, Gentium S.p.A.'s stock slid by more than 3.5%.

The stock dropped 46 cents, or 3.52%, to close at $12.60 (Nasdaq: GENT).

On Wednesday, when the offering was announced, the stock gained 7.31%, or 89 cents, to end at $13.06.

Gentium sold American depositary shares to institutional investors in both Italy and the U.S. at $11.39 each, a 6.4% discount to the company's $12.17 closing stock price on May 30.

Headquartered in Villa Guardia, Italy, Gentium is a biopharmaceutical company focused on developing drugs derived from DNA extracted from natural sources. The company's drugs are used to treat cancer and vascular diseases.

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