Pacific Ethanol stock slides on $145 million stock sale; World Waste wraps $25 million PIPE

By Sheri Kasprzak

New York, May 26 - After announcing the pending completion of a $145 million stock offering, Pacific Ethanol, Inc. watched its stock drop by 6.41%.

The stock ended the day down $2.02 to close the session at $29.50 (Nasdaq: PEIX).

The company's stock started its descent in pre-market activity, sliding 8.79%, or $2.77, at 8:40 a.m. ET. By 11 a.m. ET, the stock was down 6.54% at $29.46.

On May 25, the stock gained $1.29 to close at $31.52.

The Pacific Ethanol offering is one of two substantial placements in the alternative energy sector on Friday.

According to one market source familiar with alternative fuel technologies, climbing oil prices that may continue to jump into the summer may be benefiting companies that provide an alternative to oil.

"There certainly is a market for alternatives," he said. "It seems to be boosting the activities of these companies. But you have to realize that oil is almost surely going to be the fuel of choice for a long time. It will take much, much higher oil prices to really spark some substantial growth in alternative fuels."

In fact, oil prices pulled back up on Friday ahead of the three-day weekend to end the day up 5 cents at $71.37 per barrel. Oil prices dipped early in the session.

Under the terms of the private placement, a group of institutional investors agreed to buy 5,496,583 shares at $26.38 each, a 16% discount to Pacific Ethanol's $31.52 closing stock price on May 25.

Pacific Ethanol had 31,447,705 outstanding common shares as of May 10.

The investors also will receive warrants for 2,748,295 shares, exercisable at $31.55 each for nine months.

Cowen & Co. was the placement agent.

The proceeds will be used to accelerate the company's plan to complete five ethanol production facilities by the end of 2008 and expand its plans to complete additional ethanol production facilities by the end of 2010. Part of the proceeds will be used for investments in corn and cellulose processing technologies.

Pacific Ethanol sought out funding from the PIPE market before.

On Nov. 15, 2005, the company concluded an $84 million private placement of its series A convertible preferreds. In that deal, Cascade Investment, LLC bought 5.25 million of the preferreds at $16.00 each. The 5% preferreds are convertible at $8.00 each.

After the November 2005 placement closed, the stock gained $1.11 to close at $10.10.

Looking to the company's latest earnings report, Pacific Ethanol reported a net loss of $611,763 for the quarter ended March 31, compared with a net loss of $1.66 million for the same quarter of 2005.

Located in Fresno, Calif., Pacific Ethanol develops renewable fuels like ethanol and biodiesel products.

World Waste's $25 million deal

Another company focused on renewable resources, World Waste Technologies, Inc., sealed a $25 million placement of series B convertible preferreds.

The deal wrapped in two tranches with the final tranche - for 161,000 preferreds - closing on Friday.

In total, the company issued 250,000 shares of the 8% preferred stock.

Each preferred share is convertible for up to five years into 40 common shares. If the preferreds are not converted by the fifth year, World Waste may redeem the securities.

Investors of the preferreds received warrants for 2.5 million shares, exercisable for five years at $2.75 each, a 37% discount to the company's $4.36 closing stock price on May 25.

Also, holders of $6.25 million in senior secured debentures have the option to exchange their debentures for shares of the preferred stock on a dollar-for-dollar basis. So far, the company expects $2.48 million of the debentures to be exchanged for 24,800 series B preferreds.

Thomas Weisel Partners, LLC; First Montauk Securities Corp. and Chadbourn Securities, Inc. were the placement agents.

The stock ended the day down 3.9%, or 17 cents, to end at $4.19 (OTCBB: WDWT).

The proceeds will be used for start-up operations and improvements at the company's initial facility in Anaheim, Calif. The rest will be used for preparations needed for additional facilities as well as for general corporate purposes.

"We are delighted to have in this financing such a solid group of investors whom we believe will support World Waste now and over the long haul," said John Pimentel, World Waste's chief executive officer, in a news release. "We intend to use these resources wisely as we work to execute our strategy to get plant #1 in Anaheim running efficiently, begin the planning for additional World Waste facilities and ultimately to work internally and with partners to identify and attempt to commercialize additional beneficial uses for our cellulose biomass and other residual streams such as higher value-added paper products, fuel-grade ethanol, building products and refuse-derived fuels."

Based in San Diego, World Waste converts municipal solid waste into reusable products.

MMC Energy wraps $12 million deal

In the energy sector, MMC Energy, Inc. sold 12 million shares in a private placement for total proceeds of $12 million as part of its stock-for-stock merger with MMC Energy North America, LLC.

MMC had originally intended to raise C$6 million in the offering.

Proceeds will be used for working capital.

Sanders Morris Harris Inc. and Canaccord Capital Corp. were placement agents for the stock sale.

The transaction was carried out as part of a reverse merger that took MMC Energy public. MMC Energy North America, LLC, the operating company, merged with MMC Energy, Inc., formerly known as High Tide Ventures, Inc., which was already public. As part of the merger, MMC Energy North America, LLC abandoned its operations and adopted the operations of MMC Energy, Inc. The merger closed on May 15.

"We are extremely pleased to have completed our public listing, which will allow greater access to the global capital markets to support our ongoing growth objectives and allow for much greater global diversification of our shareholder base," said MMC CEO Karl Miller.

The company's stock remained unchanged Friday at $1.75 (OTCBB: MMCN).

New York-based MMC acquires and operates power-generation companies and other related assets.

Isotechnik's C$40 million equity line

In Canada, Isotechnika Inc. secured C$40 million from a two-year equity draw-down facility with Azimuth Opportunity Ltd.

Azimuth may buy shares of Isotechnika through May 2008 at a discount ranging from 4.5% to 7%, based on market capitalization, to the volume weighted average price of the closing stock prices for the 20 trading days before a draw.

There is a limit to each draw equal to 3.5% of Isotechnika's outstanding common shares. Also, there is a limit of 20 draws on the facility.

Canaccord Capital Corp. was the placement agent for the transaction.

On Friday, the company's stock slipped by 10.26%, or 20 cents, to close at C$1.75 (Toronto: ISA).

Most of the proceeds from the offering will be used for ongoing development of the company's ISA247 treatment for psoriasis, including a European phase 3 clinical trial scheduled to begin later this year. The rest will be used for working capital and general corporate purposes.

"This equity financing provides us with the necessary funds on an as-needed basis to advance our psoriasis clinical development program," said Randall Yatscoff, Isotechnika's CEO, in a statement. "The funds generated through this equity financing will be used initially to offset the cost of the pivotal phase 3 European trial in which ISA247 will be compared to cyclosporine in moderate to severe psoriasis. This trial is required for regulatory and marketing purposes.

"We are very pleased to have Azimuth as a partner as they have backed a number of successful companies."

Edmonton, Alta.-based Isotechnika develops therapeutic treatments for autoimmune disorders and for the prevention of organ rejection in transplants.

Montpelier stock edges up

A day after securing a $100 million investment from WL Ross & Co., Montpelier Re Holdings Ltd.'s stock advanced by 0.84%.

The company's stock gained 13 cents to end at $15.53 (NYSE: MRH).

On Thursday, when the offering was announced, the stock gained 6%, or 87 cents, to close at $15.40.

In the placement, WL Ross agreed to buy shares of Montpelier at $14.50 each, a slight discount to the company's May 24 closing stock price of $14.53.

The placement is expected to close in two tranches with the first, for $50 million, scheduled to close on June 1. The second tranche for the remaining $50 million will close upon the expiry of the Hart-Scott-Rodino antitrust notification period.

Located in Hamilton, Bermuda, Montpelier Re provides property and casualty reinsurance and insurance products.

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