Axcelis raises $75 million from convertibles; HydroGen secures $25.78 million from stock sale

By Sheri Kasprzak

New York, May 3 - It's been a busy week for tech offerings in the PIPE market and Wednesday was no exception as Axcelis Technologies, Inc. sealed a $75 million senior subordinated convertible note deal.

A single institution bought the 4.25% notes, which are due January 2009 and are convertible into common shares at $20.00 each. When the notes are payable in January 2009, they bear a premium to give the holder an 8% yield to maturity.

After the deal was announced Wednesday afternoon, the company's stock dipped 6 cents to close at $5.78 but gained a penny in after-hours trading (Nasdaq: ACLS).

In other news, Axcelis retired $50.8 million in 4.25% subordinated convertible notes due January 2007.

The proceeds from the placement will be used to retire the debt. The remainder will be used for working capital and general corporate purposes.

"We are very pleased to complete this transaction," said Stephen Bassett, the company's chief financial officer, in a news release. "After evaluating various alternatives, we found this to be the most cost-effective option for our shareholders. The refinancing is intended to assure that we will have sufficient liquidity to repay the remaining debt when it comes due in January 2007 and to continue to support ongoing operations."

Axcelis, located in Beverly, Mass., makes semiconductor-manufacturing equipment.

Elsewhere in the tech sector, HydroGen Corp. is wrapping a $25,775,000 PIPE.

A group of institutions have agreed to buy 5,155,000 shares at $5.00 apiece, a 24.2% discount to HydroGen's $6.75 closing stock price on May 2.

The investors also include warrants for 1,289,000 shares, exercisable at $6.60 each for five years.

Piper Jaffray Co. was the placement agent.

HydroGen chief financial officer Scott Schecter said in an interview Wednesday that the company decided to conduct a PIPE mainly for the speed involved in the transaction.

"We went the route of a private placement due primarily to the short period of time in which such as transaction could be consummated," Schecter said. "Less than one month elapsed from the time we engaged Piper Jaffray to the time the deal closed. This removes a great deal of market-related risk from the transaction."

Schecter said the company is pleased with the 24.2% discount at which the shares were sold.

"We would not have moved forward if this were not the case," he said.

The company raised $14.1 million from a private placement closed in July and a small follow-on offering closed in September. In the follow-on, the shares were priced a $4.46, Schecter said.

The CFO said HydroGen chose to conduct the PIPE at this time to finance the advancement of manufacturing capabilities that will "lead to significant cost reductions in our fuel cell power plants, and the commercial demonstration of our fuel cell modules.

"From a timing standpoint, we wanted to take advantage of favorable market conditions."

The company's stock remained unchanged at $6.75 Wednesday (OTCBB: HYDG).

HydroGen, based in Cleveland, develops multi-megawatt fuel cell systems.

Tech's cautious investors

One sellsider said Wednesday that there does seem to be a market for technology PIPEs this week, but that the investors are likely to be a bit more cautious than usual.

"Earnings are playing a big role," he said. "I think some [investors] are probably taking a close look at particular issuers, looking at earnings and looking at where particular stocks are instead of looking at the sector as a whole."

In particular, semiconductor companies and software companies, the sellsider said, seem to be doing a bit better than other portions of the technology sector.

"They seem to be being pushed by bigger names," he said.

Ziopharm raises $37 million

Looking to the biotech sector, Ziopharm Oncology, Inc. closed a $36,999,515 stock deal.

The company sold 7,991,256 shares at $4.63 each to ProQuest Investments; LBI Group, Inc. (an affiliate of Lehman Brothers); Emerging Technology Partners; Knott Partners; Panacea Asset Management LLC; Cycad Group; Henderson Global Investors; and Medical Biohealth Trends and VCH Expert Biotechs, both funds advised by Medical Strategy.

The investors received warrants for 2.4 million shares, exercisable at $5.56 each for five years.

Paramount BioCapital, Inc. and Griffin Securities, Inc. were the placement agents.

Proceeds from the deal will be used to advance the clinical development of the company's ZIO-101 and ZIO-201 products and phase 1 and 2 trials.

Ziopharm's stock climbed 5 cents to end at $5.25 (OTCBB: ZIOP).

"With this financial milestone, we are able to continue to develop efficiently our current, and newly identified, product candidates for better cancer therapies," said Jonathan Lewis, the company's chief executive officer, in a statement. "The strong demand from investors resulted in an oversubscribed financing. The support of investors with notable experience and success in the biotechnology industry is greatly appreciated."

New York-based Ziopharm develops a portfolio of products used to treat cancer.

Overstock's $25 million deal

In other PIPE activity Wednesday, Overstock.com, Inc. settled a $25,000,008 direct placement of its stock.

Overstock issued 1,041,667 shares at $24.00 each to a single investor. The price per share is a 7% discount to the company's $25.88 closing stock price on April 28.

The shares were sold under the company's shelf registration.

The proceeds will be used for working capital, sales and marketing, inventory purchases and general corporate purposes.

The deal was announced late Tuesday, and by the end of the session Wednesday, the stock had given up 85 cents, or 3.46%, to close at $23.72, but gained $1.27 in after-hours trading (Nasdaq: OSTK).

Based in Salt Lake City, Overstock.com is a discount online retailer of books, music, movies and other products.

Midway Gold prices C$4.68 million offering

In light Canadian PIPE action, Midway Gold Corp. arranged a C$4.68 million unit offering Wednesday, even as gold prices slipped.

The company intends to sell up to 2.6 million units at C$1.80 each.

The units consist of one share and one half-share warrant. Each whole warrant is exercisable at C$2.70 for one year.

The expiry of the warrants may be accelerated to 30 days if the company's stock trades above C$3.25 for more than 15 consecutive trading days.

The deal was announced Wednesday afternoon, and the stock fell 11 cents, or 5.47%, to settle at C$1.90 (TSX Venture: MDW).

Vancouver, B.C.-based Midway is a gold and precious metals exploration and development company.

Meanwhile, gold prices fell 40 cents on the day to close at $667 per ounce.

ANTs stock dips

A day after closing a $9,042,502 private placement of stock, ANTs Software Inc. saw its stock drop by 1.41%.

The stock fell 4 cents to end the day at $2.80 (OTCBB: ANTS).

On Tuesday, when the deal closed, the stock gained 2 cents to finish at $2.84.

In the placement, ANTs issued stock at $1.50 per share, a 46.8% discount to the company's $2.82 closing stock price from May 1.

Based in Burlingame, Calif., ANTs develops relational database management software.

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