Palm grabs $325 million for cash distribution plan; EV Energy raises $117 million

By Sheri Kasprzak

New York, June 4 - PIPE action got off to a rip-roaring start on Monday with several sizable offerings in the pipeline.

Those deals were led by a $325 million offering from Palm, Inc. to partially fund its planned $940 million cash distribution to shareholders.

Elevation Partners agreed to buy $325 million in convertible preferred stock in that deal.

News of the offering, announced late Monday morning, sent the company's stock up early. By 11 a.m. ET, the company's stock was up almost 7.9%. At the end of the day, Palm's stock had gained 9.2%, or $1.48, to close at $17.57 (Nasdaq: PALM). In after-hours trading, however, the stock gave up 15 cents.

The preferreds will be convertible into common shares at $8.50 each, a 16% premium to the post-distribution stock price over the 10 trading days ended June 1.

Elevation to own 25% of Palm

Once the offering is completed, Elevation will own about 25% of Palm's outstanding stock on an as-converted and diluted basis.

The placement is set to close in the third quarter of the calendar year.

To further fund the cash distribution, Palm has received commitments for $400 million in new debt and a $40 million revolving credit facility. JPMorgan and Morgan Stanley are the joint bookrunners for those facilities.

Once the offering is closed, Jon Rubinstein, former senior vice president of hardware engineering and head of Apple's iPod division, will become Palm's executive chairman.

"This is by far the largest investment that Elevation has ever made, which reflects our enthusiasm for Palm and its opportunity," said Roger McNamee, managing director of Elevation, in a statement.

"This investment fits perfectly with Elevation's investment strategy of partnering with great management teams to transform businesses in industries with dynamic technology change. We see Palm as uniquely positioned to deliver the integrated software and hardware solutions that will drive the next generation of mobile computing."

"As a result of this transaction, we will strengthen the Palm leadership team and create a more effective capital structure, which puts us in a great position to attract new talent, significantly strengthen our execution capabilities and deliver long-term shareholder value," said Palm chief executive officer Ed Colligan in a news release.

Based in Sunnyvale, Calif., Palm develops mobile computing technologies.

Sectors vary widely

In the broader market, sellside market sources said Monday that sectors may have less to do with recent PIPE offerings than before.

"We're getting, really, a wide variety of things," said one sellsider. "I think the sector really matters very little. More and more types of companies are looking to do PIPEs for quick capital. That may be for acquisitions or any number of things, I think."

Another sellsider agreed that the sectors are becoming broader.

"A few years ago, we pretty much saw biotech, tech, a few oil offerings," he said. "That's really starting to change. More retail-type companies, like the Wilsons offering you mentioned, are getting into the market. That would have been really rare five years ago."

Asked if there had previously been a stigma behind doing a PIPE, a sellsider said, "I suppose there may have been that. PIPEs have been traditionally done by companies in trouble. But now I think PIPEs are viewed as more of a quick, easy way to get money. You don't necessarily have to be on the verge of bankruptcy."

EV's $117 million deal

Moving to the energy sector, EV Energy Partners, LP wrapped a placement for $117,600,012.

The latest deal is in addition to the company's $98 million placement closed in late February.

In the offering announced Monday, a group of investors led by Zimmer Lucas Partners, LP, bought 3,408,696 common units at $34.50 each, a 6% discount to the volume weighted average price of the company's common units for the 10 trading days ended May 31.

Alerian Capital Management, LLC; GPS Partners LLC; Lehman Brothers MLP Partners, LP; Swank Capital, LLC; funds managed by Fiduciary Asset Management, LLC; Hartz Capital MLP, LLC; and Tortoise Capital Resources Corp. also participated in the placement.

In the placement closed in February, Zimmer Lucas, Alerian Capital, GPS, Lehman Brothers MLP and Swank bought 3,935,743 units at $24.90 each.

Proceeds will be used for the repayment of borrowings under the company's revolving credit facility and for $25 million of the $100 million purchase price of the Central/East Texas acquisition expected to close in the next five weeks.

"This transaction allows EV Energy Partners to repay our outstanding indebtedness and fund a part of our Central/East Texas acquisition," said John Walker, EV's CEO, in a news release.

"Going forward, EV Energy Partners will have a significant amount of financing capacity to continue to capitalize on future growth opportunities while, consistent with our stated strategy, maintaining a healthy balance sheet."

The company's stock gained $2.12, or 5.91%, to settle at $38.00, gaining another 9 cents in after-hours activity (Nasdaq: EVEP).

Houston-based EV Energy Partners acquires, produces and develops oil and gas properties.

Wilsons closes $45 million deal

Elsewhere, Wilsons The Leather Experts Inc. secured $45 million from a private placement of convertible preferred stock.

The preferreds will be purchased by a group of investors led by Goldner Hawk Private Equity. The investor group also includes Peninsula Investment Partners and Quaker Capital Management Corp.

The preferreds are convertible into 30 million common shares at $1.50 each. The investors will also receive warrants for 15 million shares, exercisable at $2.00 each for five years.

Proceeds will be used for working capital.

On Monday, the stock gained 13 cents, or 9.42%, to close at $1.51 (Nasdaq: WLSN). After the market closed, the stock fell by 2.65 cents.

Based in Minneapolis, Wilsons is a leather outerwear retailer.

Reed's raises $4.67 million

In other PIPE news Monday, Reed's, Inc. pocketed $4.671 million from a private placement of units.

The company sold 778,500 units at $6.00 apiece.

Each unit consists of one share and one warrant. The warrants are exercisable at $7.50 each for five years.

After the offering was announced Monday morning, the company's stock fell by more than 5%, or 40 cents, to close at $7.55 (OTCBB: REED).

APS Financial Corp. was the lead agent.

"We have made tremendous strides since our [initial public offering] in December of 2006 and this financing provides us with the additional capital resources necessary to expand our growth strategy," sad Christopher Reed, the company's CEO, in a news release.

"Specifically, we will utilize the proceeds to ramp our sales force expansion efforts, increase our marketing programs and further invest in our infrastructure to meet the growing demand for Reed's portfolio of products. We continue to be pleased with the acceptance of Reed's brand within the mainstream marketplace and look forward to further expansion of our core product lines within new and existing markets."

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

Los Angeles-based Reed's develops a line of ice creams, candies and non-alcoholic beverages.

Amarin closes offering

In the biotech sector, Amarin Corp. plc closed a $3.696 million direct placement of stock.

The company sold 6.16 million shares at $0.60 each. The share price is on par with the company's May 31 closing stock price.

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

Southridge Capital Management, Inc., an existing shareholder, invested $3 million in the offering.

Southridge and the other investors received warrants for 620,000 shares, each exercisable at $0.72 each.

Proceeds will be used for the development of the company's programs.

On Monday, Amarin's stock edged down 0.37%, not even a penny, to close at $0.5979 (Nasdaq: AMRN).

"We are delighted with Southridge's support and with the continuing strong support of our directors, who continue to invest significantly in Amarin," said Amarin CEO Rick Stewart in a statement.

"The completion of this funding enables us to pursue the development of our four key programs, three of which could potentially be in phase 2 trials next year, and provides us with additional capital to expand our neuroscience pipeline and to negotiate new drug development and licensing agreements from a position of strength."

The offering comes on the heels of a $15 million equity line from Brittany Capital Management, Ltd. announced Friday. That line has a three-year term.

Amarin, based in London, develops drugs to treat central nervous system disorders.

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