PIPE volume limited to mostly small deals, sell-sider say; Modtech raises $11.7 million in stock offering

By Sheri Kasprzak

Atlanta, June 23 - As stocks took a downward turn Thursday, sell-side sources said volume in the PIPE market was mainly limited to smaller deals.

"I'm mainly just glancing at things today that I wouldn't even take a second look at," said one sell-sider. "Small deals, not too many exciting things to report."

Another sell-sider said some of the bigger companies were probably put off by mixed stocks on Wednesday and an out-and-out dip in the major indexes Thursday.

The Dow Jones Industrial Average lost 166.49 to close at 10,421.44; the Nasdaq composite index dipped 21.37 to end at 2,070.66 and the S&P 500 edged down 13.15 at 1,200.73.

"When things get like this, yeah, you're going to get smaller companies with small pickings," that source said. "In general, the bigger, safer issuers are waiting for market conditions to improve."

Yet another sell-sider said it all depends on the sector.

"Just because stocks are down doesn't mean certain sectors aren't going to be in demand among investors," that sell-sider said. "Oil's not out of the game yet, nor are most of the minerals. Gold may still be reeling [from yesterday's price drop]."

Perris, Calif.-based Modtech Holdings, Inc., which is gearing up to close an $11.7 million offering, led private placement news Thursday.

The company has received agreements from three institutional investors and members of its management and board of directors for 2,063,492.063 shares at $5.67 each. The pricing represents 85% of the average of closing prices from May 26 through June 2.

The investors will also receive warrants equal to half of the number of share issued. The warrants are exercisable at $8 each for five years.

The proceeds will be used to strengthen the company's balance sheet and to offset losses on the company's Heritage High School project.

Modtech manufactures modular buildings for the education, construction and industrial sectors.

The company's stock closed down $0.55, or 7.8%, at $6.50 Thursday.

iSecureTrac raises $11 million

Moving to the technology sector, iSecureTrac Corp. said it has received agreements from Mykonos LP for an $11 million private placement of series C exchangeable preferred stock.

Mykonos plans to buy 1 million shares of the preferred stock at $11 each.

The preferreds pay annual dividends at 8% and are exchangeable for common shares on the basis of 47.826087 common shares for each preferred plus one warrant exercisable for an additional share at $0.23 each.

Mykonos will also receive warrants for 32,342,315 shares, exercisable at prices ranging from $0.23 to $1.65 each.

The deal is expected to close June 27.

Based in Omaha, Neb., iSecuretrac monitors individuals for clients using global positioning systems and wireless technologies. The proceeds will be used for the repayment of outstanding debt and working capital.

iSecureTrac's stock closed down a penny at $0.17 Thursday.

Adherex arranges $8.96 million deal

Two biopharmaceutical companies were in private placement news Thursday.

Adherex Technologies Inc., based in Research Park Triangle, N.C., announced it plans to raise up to $8.96 million in a unit offering.

The deal includes up to 32 million units at $0.28 each. The units are comprised of one share and one warrant for 0.3 of a share. The whole warrants provide for the purchase of an additional share at $0.35 each for three years.

The company, which is focused on the development of cancer treatments, will used the proceeds for development programs and operations.

After the offering was announced Thursday morning, Adherex's stock slipped $0.02, or 6.45%, to close at $0.29.

Based in Research Triangle Park, N.C., Adherex is a biopharmaceutical company focused on the development of cancer treatments.

Another biopharmaceutical company, RegeneRx Biopharmaceuticals, Inc., based out of Bethesda, Md., received agreements for a $4,998,500 offering. After word of that deal was released Thursday morning, RegeneRx's stock fared better than Adherex's, gaining $0.30, or 11.54%, to end at $2.90.

The company sold 1,538,000 shares at $3.25 each to a subsidiary of Sigma-Tau Group and two of its subsidiaries.

The deal is expected to close within 10 days.

RegeneRx said it plans to use the proceeds to accelerate work in the cardiovascular and ophthalmic fields.

"Sigma-Tau Group's investment comes at a very opportune time as it allows us to initiate clinical development of the cardiovascular and ophthalmic components of our therapeutic platform at the best cost of capital currently available and in parallel with our dermal wound-healing program," said RegeneRx's president and chief executive officer J.J. Finkelstein in a statement. "It also indicates Sigma-Tau's confidence in the technology and our ability to execute a robust and aggressive clinical program that we believe will be to the ultimate benefit of our stockholders."

Neil Lyons, RegeneRx chief financial officer, said the company's shelf registration for an offering of up to $60 million, filed last week, will be maintained until the market is considered more receptive.

Bethesda, Md.-based RegeneRx is a biopharmaceutical company focused on developing products to treat acute and chronic wounds and treatments for degenerative human tissue and organ diseases.

Even so, one market source said these two companies, and most of the biopharmaceutical companies issuing deals recently have been relatively small.

"I don't really follow them," that market source said. "I think they are all raising money as the window is open."

The window hasn't sprung wide open, though, as investment bankers see it.

"As the public market falls off, so does the PIPEs market," said Julie Levenson, managing director of the PIPE team at Houlihan Lokey Howard & Zukin.

PGM arranges $6 million offering

Moving to the natural resources sector, Toronto-based mineral exploration company PGM Ventures Corp. announced its plans Thursday to raise $6 million in a stock offering.

A portion of the funds will be used to acquire the remaining shares of Minas de Aguas Tenidas SA from Insersa SA and that acquisition, according to one market source, may have helped the pricing of the deal. PGM currently owns 80% of Minas de Aguas stock, but intends to purchase the remainder by the close of business tomorrow for €2 million.

"Investors see this acquisition as a positive for them," the sell-side source said. "Essentially, additional interest in that company [Minas de Aguas Tenidas] means more profit for PGM and that always looks good."

The offering includes 13,426,909 shares at $0.4468 each.

M&A Advisors Ltd. is the placement agent.

The proceeds PGM does not use for the stock acquisition will be used for a bankable feasibility study on the Aguas Tenidas mine and for working capital.

After the offering was announced Thursday afternoon, PGM's stock remained unchanged at $0.48.

Ipix's stock makes gains

A day after closing a $10 million private placement, Ipix Corp.'s stock made slight gains Thursday.

The company's stock closed up $0.05, or 1.91%, to end at $2.67 before losing $0.06 in after-hours trading.

After the Vienna, Va.-based company closed the deal Wednesday, the company's stock dipped $0.21, or 7.42%, to close at $2.62.

Ipix, which develops imaging products for government and commercial uses, sold units at $2.41 each.

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