GOME Electrical finalizes $125 million convertible deal; Santarus gets $75 million equity line

By Sheri Kasprzak

New York, Feb. 3 - An international offering led PIPE news to wrap up the week with GOME Electrical Appliances raising $125 million in convertible bonds.

Warburg Pincus Private Equity IX, LP bought the 1.5% bonds due 2011. The bonds are initially convertible into 151,496,788 shares at $0.8251 each. GOME also issued 25,183,842 warrants, exercisable at $0.9927 each for five years.

The placement sent GOME's stock up 21.5% on the Hong Kong Stock Exchange (Hong Kong: GOME). The company's stock gained HK$1.30 to close at HK$7.35. In the United States, the company's stock remained flat at $0.78 (Pink Sheets: GMELF).

Proceeds from the bonds will be used for the expansion of the company's store network through the People's Republic of China.

Based in Hong Kong, GOME is an electrical appliance retailer in China.

Elsewhere, Santarus, Inc. received a $75 million committed equity financing facility.

For the next three years, Kingsbridge Capital Ltd. agreed to buy shares of Santarus at a discount to the company's stock over an eight-day pricing period. The discounts may range from 6% to 10% depending upon market conditions.

The investor received warrants for 365,000 shares, exercisable at $8.2836 each, a 30% premium to the average of the closing stock price for the five trading days before the agreement was signed. The warrants expire in five years.

On Aug. 22, 2005, Santarus raised $31.24 million from a direct placement of 7.35 million shares.

According to the company's latest earnings report, Santarus reported a net loss of $16,086,019 for the quarter ended Sept. 30, 2005. The loss was less than the $21,192,452 net loss in the year-ago period.

"We believe that our current cash, cash equivalents and short-term investments will be sufficient to fund our operations for at least the next 12 months; however, our projected revenue may decrease or our expenses may increase and that would lead to our cash resources being consumed before that time," said the company's latest earnings report.

"Until we can generate significant cash from our operations, we expect to continue to fund our operations with existing cash resources that were primarily generated from the proceeds of offerings of our equity securities."

On Friday the company's stock gained 7 cents, or 1.05%, to close at $6.76. In after-hours trading, the stock gained another penny (Nasdaq: SNTS).

San Diego-based Santarus is a pharmaceutical company focused on developing treatments for gastrointestinal diseases.

EntreMed to settle $30.06 million deal

EntreMed, Inc. is gearing up to complete a $30,062,500 private placement with a group of institutional investors.

The company plans to issue 13 million units at $2.3125 each. The units are comprised of one share and one half-share warrant. The whole warrants are exercisable at $2.50 each.

The stock advanced 3 cents, or 1.33%, to end at $2.29 Friday (Nasdaq: ENMD).

Rockville, Md.-based EntreMed is a pharmaceutical company focused on treatments for cancer and inflammatory diseases.

PIPE volume picks up

In the broader PIPE market Friday, sellsiders said even though stocks took a hit, volume remained relatively lively compared to earlier in the week.

The Dow Jones Industrial Average lost 58.36 to close at 10,793.62; the Nasdaq composite index fell 18.99 to end at 2,262.58, and the Standard & Poor's 500 composite index retreated 6.81 to close at 1,264.03.

Most of the activity, one market source noted, came from the biotech sector despite a particularly sour day for biotech stocks on Thursday.

"Yeah, Thursday was a bit off [for biotech stocks], but it really hasn't been that bad on the week," said one market source. "As a whole, I think conditions are still good; investors' interest is still strong."

"What we are seeing [in biotech] are more direct [stock] deals," said another market source.

Among the biotech deals in the pipeline this past week were a $26 million direct placement from Hollis-Eden Pharamceuticals, Inc., which was priced at a 10% discount to market; a $65.03 million private placement of stock from NeoRx Corp.; and a $20 million unit deal priced by Arius Research.

Grandview prices C$5 million units

Among Canadian issuers, Grandview Gold Inc. negotiated a C$5 million unit deal, even as gold prices took a hit Friday, losing $5.10 to close at $567.10 per ounce.

The company plans to sell up to 4,545,455 units at C$1.10 each. The units are comprised of one share and one half-share warrant. The whole warrants are exercisable at C$1.75 each for three years.

The deal is being placed through a syndicate of placement agents led by Haywood Securities Inc. and including Coniston Investment Corp. The syndicate has a greenshoe for up to C$1.5 million in units.

Proceeds will be used for ongoing exploration of the company's Pony Creek gold property.

Grandview's stock gained 2 cents to close at C$1.20 (CNQ: GVGI).

Toronto-based Grandview is a gold exploration company.

In the oil sector, Contact Exploration Inc. arranged a C$4 million private placement of flow-through shares and units of one share and one half-share warrant. The whole warrants are exercisable at C$1.20 each for one year.

The number of units and shares offered in the deal could not be determined Friday.

The offering is expected to Feb. 16.

The stock advanced 21 cents, or 13.64%, Friday to end the day at C$1.75 (TSX Venture: CEX).

Proceeds will be used for exploration on the company's Stoney Creek property in New Brunswick.

"We are extremely excited about the opportunity to further develop this historic field," said Terry Brown, the company's president, in a statement. "The 3-D seismic program, which we recently completed and interpreted, has suggested a number of new targets yet tested with any drilling activity in the past.

"This financing will provide us ample funding to test some of these new zones with a couple of additional horizontal wells. We have always believed that by implementing modern technology in this development prospect we can extract incremental oil and gas from Stoney Creek field, which produced from 1909 to 1991."

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

Santoy to raise C$3.75 million

Looking elsewhere in Canadian resources offerings, Santoy Resources Ltd. priced a C$3.75 million deal of flow-through shares and units of one share and one half-share warrant.

The company intends to sell up to 3,308,823 flow-through shares at C$0.68 each and up to 2.5 million units at C$0.60 each. The whole warrants associated with the units are exercisable at C$0.80 each for 18 months.

Toll Cross Securities Inc. is the placement agent.

The deal is scheduled to close Feb. 15.

Proceeds will be used for exploration on the company's uranium projects in British Columbia, Saskatchewan, Manitoba and Labrador, for exploration on the company's coal and coalbed methane projects and for oil and natural gas exploration. The remainder will be used for working capital.

Santoy, based in Vancouver, B.C., is a mineral exploration company.

On Friday, the company's stock moved up 12.28%, or 7 cents, to end at C$0.64 (TSX Venture: SAN).

Hollis-Eden stock edges up

Hollis-Eden Pharmaceuticals, Inc.'s stock moved up slightly Friday, a day after the company announced the pending settlement of a $26 million direct placement.

The company's stock gained 6 cents, or 0.96%, to close at $6.28 on Friday. The stock gained another 22 cents, or 3.5%, in after-hours trading (Nasdaq: HEPH).

Institutional investors, both new and existing, agreed to buy shares at $6.50 each. The price per share is a 10% discount to the company's closing stock price of $7.22 on Feb. 1.

San Diego-based Hollis-Eden is a biopharmaceutical company focused on developing immune regulating hormones.

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