Plains All American secures $159.1 million from stock sale; SatCon to close $12 million note offering

By Sheri Kasprzak

New York, July 20 - As stocks took a downward slide Thursday after a comeback Wednesday, PIPE volume picked back up with a few rather large deals at the forefront.

At the head of the pack was Plains All American Pipeline, LP with a $159.1 million direct placement of its common units.

A group of institutional and private investors led by Vulcan Capital, Kayne Anderson Capital Advisors and Tortoise Capital Advisors agreed to buy 3.7 million units at $43.00 each, a 4% discount to the company's $44.92 closing stock price on Tuesday.

The company had 77,273,248 outstanding common units as of April 24.

Plains' general partner agreed to make a proportionate capital contribution that would bring the total proceeds from the deal to $163 million.

Plains expects the deal to close by the end of the month.

The deal was announced early Thursday, and by the end of the day, the stock had gained 50 cents, or 1.11%, to settle at $45.42 (NYSE: PAA).

"They're a big name," said one Vancouver, B.C.-based market source familiar with the resources sector. "I think it looks pretty good for them. They've got a lot going on and this will pretty much bring them in line with their future plans, from what I can see."

Proceeds will be used to help fund two pending acquisitions and to pay debt. The rest will be used for general corporate purposes.

The company also announced Thursday that it plans to acquire three refined product pipeline systems in Texas from Chevron Pipe Line Co. for $65 million.

"Despite a year of significant acquisition activity, PAA's disciplined, methodical and timely approach to funding its acquisition and expansion activities has enabled us to maintain a strong capital structure and significant liquidity," said Phil Kramer, the company's chief financial officer, in a statement.

"As a result, PAA is well positioned to be able to continue to capitalize on future growth opportunities. In the aggregate, the proceeds generated by our two equity private placements in 2006, the excess equity proceeds carried over from 2005 and the approximately $125 million of projected 2006 operating cash flow in excess of partnership distributions are expected to total approximately $535 million and accomplish our objective of funding at least 50% of aggregate acquisitions and expansion capital projects with equity and excess cash flow."

For the quarter ended March 31, Plains All American reported net income increased to $63.4 million from net income of $32.8 million for the corresponding quarter of 2005.

Based in Houston, Plains is an intrastate and interstate crude oil transportation, gathering, marketing and storage provider.

In the broader energy market, oil prices made a comeback on Thursday, gaining 42 cents to settle at $73.08 per barrel.

Meanwhile, stocks fell after making some significant gains Wednesday with the Dow Jones Industrial Average down 83.32 to close at 10,928.10. The Nasdaq composite index was down 41.29 to settle at 2,039.42 and the Standard & Poor's 500 composite index closed down 10.68 at 1,249.13.

SatCon's $12 million PIPE

In the tech sector, SatCon Technology Corp. plans to seal a $12 million private placement of senior secured convertible notes.

The notes bear interest at the higher of 7% or Libor plus 350 basis points and are convertible at $1.65 each, a 6% premium to the average of the company's last five trading days.

Of the notes, 75% are due in two years. After two years, the company may elect to defer the rest of the principal and interest payments until the 60th month after closing.

The investors also will receive warrants for 3,636,368 shares, exercisable at $1.815 each.

First Albany Capital was the placement agent.

After the offering was announced Thursday morning, SatCon's stock dropped by 17.26%, or 29 cents, on the day to close at $1.39 (Nasdaq: SATC). In after-hours trading, the stock gained a penny.

Proceeds will be used to accelerate the expansion of the company's alternative energy stationary power business.

"We greatly appreciate the tremendous vote of confidence in SatCon that this financing represents from our new institutional investors," said David Eisenhaure, SatCon's chief executive officer, in a news release. "The capital infusion fulfills part of SatCon's overall financing strategy and supports our plans for growth in our core businesses of developing and manufacturing alternative energy products, components for hybrid electric vehicles and advanced micro-electronics.

"Achieving this financing milestone will allow us to acclerate the expansion of our alternative energy stationary power business under the management of Clemens van Zeyl."

Boston-based SatCon develops power electronic and control products for the alternative energy markets.

Alfacell raises $11.3 million

In the biotech sector, Alfacell Corp. saw its stock dive after completing an $11,300,051 private placement with a group of institutional and individual investors led by ProMed Management, Inc.

The stock plummeted by 30%, or 86 cents, to end at $2.00 (Nasdaq: ACEL). The stock had fallen by 18.88%, or 54 cents, by 9:30 a.m. ET.

In the placements, the investors agreed to purchase 6,457,172 shares at $1.75 each, a 63% discount to the company's $2.86 closing stock price on Wednesday.

The investors received series A-1 warrants for 3,228,586 shares, exercisable at $2.88 each through July 17, 2011 and series A-2 warrants for 3,228,586 shares, exercisable at $2.88 each through July 17, 2011.

C.E. Unterberg, Towbin LLC was the placement agent.

Proceeds will be used for general corporate purposes and to support the company's three-year strategic plan.

"The big boys who just invested got nearly a 40% discount to market and warrant sweeteners," said one buysider in Atlanta. "Even a big load of [expletive] is worth buying if you can get it that cheap. The PIPE investment calculation is as follows: They knew the stock would take a hit today, but they are looking at next year when the company will file a [New Drug Application with the Food and Drug Administration], whether it has a chance of approval or not. And there will be enough dumb asses who will believe the company line right up to the time that the NDA is denied or, if approved, until the likely event that the drug is a flop in the marketplace because it is substantially inferior to the already well-established standard of care.

"If this company had a decent drug with a decent amount of potential, it would be worth at least $400 million to a Big Pharma and management would have sold it out in a heartbeat for $250 million or less. Look what they just sold a big chunk of it for."

Even so, the company considers the offering to be a "major milestone event."

"We have secured the funding that will enable the company to more aggressively execute its business plan," said CFO Robert Love, in a statement. "In addition, Alfacell now has a stronger level of institutional ownership, which we plan to use as a springboard for new and additional exposure to key fund managers, research analysts and other industry observers.

"While the financing is central to our capital markets strategy, it is most important as a catalyst for the timely and successful execution of the company's product development efforts. Specifically, we now have the funding to further accelerate our key clinical and preclinical programs."

Located in Bloomfield, N.J., Alfacell is a biopharmaceutical company focused on developing treatments for cancer and other diseases using a ribonuclease technology platform. Its onconase product is in phase 3b clinical trials to treat unresectable malignant mesothelioma.

Petaquilla leads Canadians

Heading up Canadian PIPE action was a C$27 million private placement from Petaquilla Minerals Ltd.

The non-brokered deal includes up to 11.25 million units at C$2.40 each.

The units are comprised of one share and one half-share warrant with each whole warrant exercisable at C$4.50 for five years.

The deal is scheduled to close before Petaquilla's merger with Petaquilla Copper Ltd.

Half of the offering will be made up of shares of Petaquilla Minerals and half of shares of Petaquilla Copper.

The acquisition is scheduled to close in mid-August.

Once the placement closes, Petaquilla will conclude a C$40 million follow-on placement on behalf of Petaquilla Copper, selling 20 million units of one share and one half-share warrant.

The whole warrants are exercisable at C$3.50 each for five years.

Of the proceeds from the private placement, C$22 million will be used to advance the company's Molejon gold project in Panama and for working capital, while the rest will be used to benefit Petaquilla Copper.

The proceeds from the follow-on offering will be used for the development of infrastructure of the company's copper projects.

On Thursday, the stock gained 22 cents, or 7.8%, to end at C$3.04 (Toronto: PTQ).

Based in Vancouver, B.C., Petaquilla Minerals is a mineral exploration company.

Capitol Energy raises C$23.48 million

In Canadian energy offerings, Capitol Energy Resources Ltd. closed a private placement of stock, including a greenshoe, for C$23,488,750.

The company issued a total of 4,945,000 shares at C$4.75 each, including the greenshoe for 645,000 shares exercised by a syndicate of underwriters led by Genuity Capital Markets.

Proceeds from the deal will be used for exploration on the company's Dixonville properties.

Capitol's stock remained unchanged at C$5.18 (TSX Venture: CPX).

Capitol, based in Calgary, Alta., is an oil and natural gas exploration company.

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