Severn shaves deal, eyes federal funds; Lime, Advanced ID, Power of the Dream announce deals

By Kenneth Lim

Boston, Nov. 18 - Severn Bancorp, Inc. wrapped a downsized $7 million private placement of preferred stock and debt units to fund general purposes.

Lime Energy Co. plans to sell $6.28 million of stock and warrant units through a private placement as part of a recapitalization plan.

Advanced ID Corp. plans to place C$3 million of convertible debentures with a single investor to fund its growth initiatives as the company aims for profitability in a year.

Power of the Dream Ventures, Inc. placed $1 million of its common stock with a private investor to provide capital for product development.

Severn raises $7 million

Severn Bancorp downsized a private placement of units to raise $7 million.

The deal priced for between $10 million and $25 million on July 30.

The company sold 70 units at $100,000 each. It had aimed to sell between 100 and 250 units. Each unit consists of 6,250 series A 8% non-cumulative convertible preferred shares and a $50,000 8% redeemable subordinated note due Dec. 31, 2018.

Each preferred is convertible, at the option of the holder, into one common share at any time, implying an initial conversion price of $8. The issuer may force conversion on or after Dec. 31, 2013.

Severn common stock (Nasdaq: SVBI) closed at $6.20 on Tuesday, up by 12.12% or $0.67.

Proceeds will be used for general corporate purposes.

Severn Bancorp, based in Annapolis, Md., is a savings and loan holding company.

The bank also said Tuesday that it expects to raise $23.5 million from the U.S. Treasury's Capital Purchase Program on Nov. 21.

"We are very pleased to successfully close our PPO [private placement offering] and be selected by the U.S. Treasury, upon the recommendation of Severn's primary regulator, the Office of Thrift Supervision, Atlanta District Office, to be granted the opportunity to participate in the CPP," Severn chairman and chief executive Alan Hyatt said in a statement. "This will increase our regulatory capital from approximately $100 million to $130 million. While we are already a well capitalized institution, this infusion of low-cost capital under the CPP will further strengthen our ability to continue our long-standing tradition of lending in our community."

Lime Energy to sell units

Lime Energy plans to place $6.28 million of stock and warrant units as part of a recapitalization plan.

The company will sell about 1.79 million units of one common share and a quarter-share warrant at $3.51 per unit. Each three-year warrant is exercisable at $4.10. Lime Energy common stock (Nasdaq: LIME) dropped 13.39% or $0.51 to close at $3.30 on Tuesday.

The deal will settle in two tranches. The first tranche, which was placed with unaffiliated investors, settled at pricing for $3 million. The remainder of the units will be sold to affiliated investors once shareholder approval is obtained.

Based in Elk Grove Village, Ill., Lime Energy is an energy technology and engineering company.

The company also plans to convert a $14.71 million 17% promissory note due March 2009 held by company chairman Richard Kiphart into convertible preferred stock that yield a cash dividend of 9% and payable-in-kind dividend of 6%. The payable-in-kind dividend of the preferred stock will increase to 8% after June 30, 2009.

"We are extremely pleased to announce this financial recapitalization which provides us with the working capital to finance our growth, reduces debt and significantly strengthens our balance sheet," said Lime Energy chief executive David Asplund in a statement.

"At a time when banks have reduced lending, the capital markets have essentially shut down and many investors have pulled back, we were successful in raising capital from new and existing shareholders including investors from around the world who all understand our business and recognize the growing demand for energy efficiency. In addition, it is telling that many of our directors and senior management joined with Mr. Kiphart in leading this investment."

Advanced ID sells convertibles

Advanced ID plans to place C$3 million of 6% convertible debentures due 2009 with La Jolla Cove Investors.

Advanced ID common stock (OTCBB: AIDO) ended Tuesday at $0.10, unchanged from the previous session.

Proceeds will be used expand in China, to provide working capital for the fulfillment of certain large contracts and for other general corporate purposes.

Calgary, Alta.-based Advanced ID is a microchip identification technology manufacturer.

"We are pleased to announce the investment by La Jolla Cove Investors in Advanced ID which significantly paves the way for us to attain profitability in 2009," Advanced ID president and chief executive Dan Finch said in a press release. "In the face of severe conditions in the capital markets where funding has been virtually nonexistent within the micro cap sector, the investment by an institutional investor such as LJCI validates our business strategy and the competitive position we maintain with our world class RFID technology."

Power of the Dream raises $1 million

Power of the Dream Ventures completed a $1 million private placement of shares with a single investor.

The shares were sold at $0.40 apiece. Power of the Dream common stock (OTCBB: PWRV) closed unchanged at $0.36 on Tuesday.

Proceeds will be used for working capital.

Power of the Dream is a technology holding company based in Budapest, Hungary.

The placement is the second capital raise by the company in just over a month. The company in October announced a $5 million equity financing commitment from YA Global Investments, LP.

"Right on the heels of our funding commitment from YA Global we are pleased to announce an additional, cash-based funding round from a private investor," Power of the Dream president Viktor Rozsnyay said in a statement.

"We now have the financial strength to move full steam ahead on completing product development. The first of these will be a public beta release of iGlue on Jan. 30, 2009. We are fortunate to have strong and continued investor support for our vision. We look forward to completing all tasks required to turn our vision into a fully functional, revenue producing company."

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