PIPE volume back in full swing, sell-siders report; Central European Distribution raises $116.5 million

By Sheri Kasprzak

New York, Aug. 3 - Private placement issuance exploded Wednesday, sellside sources said, as earnings season winds down.

Several market sources had predicted earlier this week and late last week that issuance volume would return to its normal level by the middle of this week.

Even though the major stock indexes had been down for most of the day, only the Nasdaq composite index remained down at the closing bell.

"It was jumping today, wasn't it," said one market source. "There's really a demand for the deals, there's really a need, I'd say, among some of these companies, for capital. It all comes together and makes for stronger volume."

Another sell-sider agreed and noted that some of the companies issuing deals right now may be expanding their capital budgets following second-quarter earnings reports.

"But I wonder," he added, "how long this will last. I figure not very long because what we're seeing now is from earnings [reports] and once those capital needs are met, volume will probably settle back down."

Moving to specific offerings, Central European Distribution Corp. secured $116,558,400 from a private placement of stock, the company reported Wednesday.

The Bala Cynwyd, Pa.-based alcoholic beverage importer will issue 3.36 million shares at $34.69 each. The price per share is a 7% discount to the trailing 15-day average closing share price.

The closing of the deal is contingent upon Central European's acquisition of 61% of the outstanding shares of Polmost Bialystok SA, a Polish vodka producer. The acquisition is slated to close in September.

"The participants in this placement are well-known national and international institutions, some of whom are current shareholders," said William Carey, the company's president and chief executive officer, in a statement. "We are pleased with the vote of confidence in us that some of our current investors have shown by participating in this placement. Additionally, we welcome our new shareholders and look forward to a long-term relationship with them."

On Wednesday, the company also released its second-quarter earnings report. The company reported a net income of $5.6 million, or $0.33 per fully diluted share, up from $4.5 million, or $0.28 per fully diluted share, for the same period in 2004.

Proceeds from the private placement, along with the company's €325 million senior secured notes due 2012, will be used for acquisitions and general corporate purposes.

On Wednesday, Central European's stock climbed $0.62 to end at $38.87 but slipped $0.03 in after-hours trading.

MannKind raises $175 million

Over in the biotech sector, MannKind Corp. is closing a $175 million private placement with institutional investors and its chief executive officer.

No details on the pricing of the deal could be determined Wednesday. Calls to the company's management for additional information and for comments were not returned by press time.

The company reported that it has secured definitive agreements from major institutional investors for $87.5 million in shares, and the company's chief executive officer, Alfred Mann, has agreed to buy $87.5 million in shares.

Wachovia Securities and Leerink Swann & Co. are the placement agents.

After the deal was announced Wednesday morning, the Valencia, Calif.-based company's stock took off, gaining $1.20, or 11.73%, to end at $11.43.

MannKind is focused on therapeutic treatments for cancer and diabetes.

Artistdirect closes $45 million deal

Los Angeles-based Artistdirect, Inc. announced the closing of $45 million in notes Wednesday.

The proceeds from the notes will go to fund the company's acquisition of MediaDefender, Inc., a company that provides anti-piracy security technologies. The acquisition is expected to cost $42.5 million.

The company sold a $30 million convertible note and a $15 million senior note, according to a form 8-K filed with the Securities and Exchange Commission.

The subordinated convertible note matures in four years, bears interest at 4% annually and is initially convertible into common shares at $1.55 each.

The investors received warrants for up to 8.25% of the shares issuable upon conversion. The warrants are exercisable at $1.55 each for five years.

The senior note matures in three years and bears interest at 11.25% annually.

For the senior note, the investors received warrants for up to 3.25 million shares, exercisable at $2.00 each for five years.

Artistdirect is an entertainment company that provides music and video downloads from the internet.

The company's stock closed unchanged at $3.00 on Wednesday.

ProEx prices C$31 million offering

In Canada, ProEx Energy Ltd. arranged a C$31 million private placement, a deal sparked by a surge in oil prices on Tuesday.

The Calgary, Alta.-based oil and natural gas exploration company plans to sell 2.5 million shares at C$12.40 each.

The proceeds will be used to increase the company's capital budget to C$85 million.

Following the announcement of the offering Wednesday morning, ProEx's stock slipped C$0.09 to close at C$12.69.

"We continue to build a very strong and focused position in the northeast British Columbia foothills and have developed a significant inventory of incremental drilling opportunities," said David Johnson, ProEx's president and chief executive officer, in a statement. "Our increased capital program will allow us to test these opportunities and position ourselves both operationally and financially for our potential 2006 program. Our large land portfolio and growing drilling prospect inventory provide ProEx with a unique opportunity to increase our pace."

Another oil company, this one based in London, also priced a PIPE Wednesday.

Circle Oil plc announced its plans to raise £10 million through the sale of 33,333,350 shares at 30p each.

"There were a few," noted a market source Wednesday of oil exploration companies pricing offerings. "Oil went up suddenly yesterday, so that's probably the cause. It didn't last and that may have an impact on whether these [deals] get done at all."

PanAmerican Bancorp's stock climbs

A day after closing a $17.4 million private placement, PanAmerican Bancorp's stock edged up.

The company's stock gained $0.09 to end at $5.08 Wednesday.

On Tuesday, when the closing was announced, the company's stock climbed $0.17 to close at $4.99.

The Miami-based bank holding company sold units at $4.00 each. The units include one share and one half-share warrant.

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