First BanCorp sells $94.8 million in shares; Faro Technologies secures $56.1 million

By Sheri Kasprzak

New York, Aug. 9 - First BanCorp's $94,812,500 offering with Scotiabank topped PIPE headlines on Thursday.

The deal brings Scotiabank's ownership of First BanCorp to 10%.

Scotiabank agreed to buy 9.25 million shares at $10.25 each in a deal that is expected to close in 15 to 20 days. UBS Investment Bank was the placement agent.

First BanCorp's stock gave up 11 cents on Thursday to close at $8.87 (Nasdaq: FBP).

"We are pleased to officially welcome Scotiabank, an internationally recognized leading financial institution as a shareholder of First BanCorp," said Luis Beauchamp, chief executive officer, in a news release.

"This investment signals a vote of confidence in the financial strength of First BanCorp and the value of the FirstBank franchise. This private placement further strengthens First BanCorp's capital position and provides additional liquidity with which to implement our go-forward strategy and better serve our customers."

First BanCorp, based in San Juan, Puerto Rico, is a state-chartered commercial bank operating in Puerto Rico, the Virgin Islands and Florida.

Meanwhile, stocks in the broader markets took a beating on news that BNP Paribas will suspend three of its asset-backed funds because of woes in the subprime mortgage market.

The Dow Jones Industrial Average gave up 387.18 to close at 13,270.68. The Nasdaq composite index settled down by 56.49 to end at 2,556.49, and the Standard & Poor's 500 composite index closed down 44.40 to close at 1,453.09.

"Other than the drop in stocks, I really don't think it's impacting us that much," said one sellside market source when asked about the liquidity problems in the subprime mortgage sector impacting PIPEs. "REITs do conduct PIPEs from time to time but they're not a major issuer. There may be some hesitance to do an offering with stocks heading down like they are now."

Faro's $56.1 million deal

The drop in stocks didn't seem to stop two major offerings from hitting the PIPE market.

In addition to the $94.8 million placement from First BanCorp, Faro Technologies, Inc. announced plans to close a $56.1 million registered direct placement of stock.

A group of institutional investors agreed to buy 1.65 million shares at $34.00 each.

The shares will be sold under the company's shelf registration.

Robert W. Baird & Co. Inc. is the bookrunner for the deal, which is expected to wrap up on Aug. 14.

Proceeds will be used for the acquisition of businesses or technologies as well as for working capital and general corporate purposes.

Faro's stock hit a slump early in the session, dropping by more than 10% by 9:38 a.m. ET. The stock went on to lose 5.19%, or $1.93, to close at $35.26, losing another 28 cents in after-hours activity (Nasdaq: FARO).

Based in Lake Mary, Fla., Faro develops software-based, three-dimensional measurement devices used in construction and forensic applications.

SMF raises $11.77 million

Moving to the energy sector, SMF Energy Corp. sealed an $11.77 million offering of debt and stock.

The offering included $10.6 million in 11.5% redeemable senior secured subordinated promissory notes due Dec. 31, 2009. The investors also bought 790,541 shares at $1.48 each with warrants for 39,527 shares, exercisable at $1.752 each for four years.

Half of the principal of the notes is convertible into common shares at $1.46 each.

The investors also received warrants for 39,527 shares, exercisable at $1.752 each for four years.

Philadelphia Brokerage Corp. was the placement agent.

SMF's stock slipped by a penny on Thursday to close at $1.27 (Nasdaq: FUEL).

SMF closed a $3.3 million private placement of stock in February and closed another $1.2 million equity offering earlier this year.

The company plans to use the proceeds to redeem its outstanding senior secured promissory notes issued in August 2003, January 2005 and September 2005.

Connected to the deal, Wachovia, the company's working capital lender, amended its $25 million credit facility to increase the loans available to the company by lowering the minimum unused availability covenant to $750,000 from $2 million.

"This refinancing is a significant step in reducing our debt, improving our capital structure and streamlining our operations," said CEO Richard Gathright in a statement.

"Now we have a single debt mechanism securing the vehicles and equipment that were previously spread out among three different debt issuances. We will now be able to take better advantage of opportunities to increase efficiency and productivity by replacing vehicles and equipment or transferring vehicles or equipment among our different subsidiaries and operating divisions."

Located in Fort Lauderdale, Fla., SMF provides petroleum product distribution services, transportation logistics and emergency response services to the trucking, construction, utility, energy, chemical, manufacturing and government services industries.

Leading Brands sips up $9.9 million

Leading Brands, Inc. plans to conclude a $9.9 million private placement with a group of institutional investors.

Leading Brand's stock also began to drop early in the session, losing 5.78%, or 19 cents, by 9:46 a.m. ET.

The offering includes 3.3 million shares. The share price is an 8.8% discount to the company's $3.29 closing stock price on Wednesday.

The investors also will come away with warrants for 1.65 million shares, exercisable at $3.95 each.

Proceeds will be used for marketing of the company's proprietary beverage brands as well as for working capital.

"This financing will allow us to greatly enhance our marketing and brand-development efforts behind TrueBlue Blueberry Juice, Stoked Energy Drinks, Infinite Health Water, Trek Natural Sports Drinks, Caesar's Cocktails and our other healthy beverage brands," said Ralph McRae, the company's chief executive officer, in a news release.

"Having completed our transition to a branded healthy beverage company just a few short months ago, from a business perspective, the timing of this financing is very good as well."

Leading Brands' stock fell by 11 cents to close at $3.18 (Nasdaq: LBIX).

Vancouver, B.C.-based Leading Brands creates, distributes and markets its own brand of beverages.

Energy drink makers in market

Leading Brands is not the only energy drink developer to head to the PIPE market for funding.

Perennial PIPE issuer Who's Your Daddy, Inc. sealed a $3.25 million stock deal in April.

"It's a trendy thing," said one market insider of the prevalence of energy drink makers in the market. "Beverage bottlers seem to be in the market more often."

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