Motorcar Parts secures $40 million from stock deal; biotech companies remain in market

By Sheri Kasprzak

New York, May 18 - Even though biotech companies remained prevalent in the PIPE market to close the week, activity on Friday was led by a $40.04 million offering from Motorcar Parts of America, Inc.

Meanwhile, a sellside market source said biotech deals will likely continue to be visible in the PIPE market.

"Biotech companies tend to raise money when they know they have certain trials coming up or when they're up for FDA approval for something or other," he said. "This means they have an almost-constant need for capital; so, they're more likely to go hunting for it from a PIPE. It's easy and quick to get a capital infusion this way."

Among the biotech names in the market were Quest Group International, Inc., which said it plans to enter into a licensing agreement with Vitae Pharmaceuticals, Inc., and Vasogen Inc.

Meanwhile, in the Motorcar Parts offering, the company secured agreements from a group of accredited investors to buy 3.64 million shares at $11.00 each. The share price is a 10.9% discount to the company's $12.35 closing stock price on Thursday.

The investors also will receive warrants for 546,283 shares, exercisable at $15.00 each.

Proceeds will be used for general corporate purposes.

After the deal was announced Friday morning, the company's stock gained 5 cents to close at $12.40 (Pink Sheets: MPAA).

Connected to the offering, the company received a waiver on certain violations of the covenants of its credit agreement with Union Bank of California, NA.

"I am excited with our enhanced working capital base," said Selwyn Joffe, the company's chief executive officer, in a news release.

"MPA is now financially much stronger and is in a position to deploy some of this working capital to enhance our growth and assure successful completion of our offshore initiative. We are thrilled with the quality and diversity of our enhanced shareholder base."

Los Angeles-based Motorcar provides remanufactured alternators and starters for the automotive aftermarket.

Quest raises $20 million

In health care-related offerings, Quest Group wrapped a $20 million private placement as part of its licensing agreement with Vitae.

Though the terms of the deal were not immediately available Friday, news of the offering sent the company's stock up 41.43%, or 29 cents, to close at $0.99 (OTCBB: QSTG).

The company sold shares to a group of institutional investors through placement agent Hunter World Markets, Inc.

Under the licensing agreement, the company acquired a portfolio of technology and intellectual property around nuclear receptors for new oncology product candidates for blood and solid tumor cancers and cancer support care from Vitae.

Proceeds will be used for the development of pharmaceutical products as well as for the acquisition and development of oncology products.

"I am very pleased to be a part of this venture and help provide the resources that enable this group of distinguished scientists with extensive experience in developing some of the biggest pharmaceutical products of the past decade, including Viagra and Taxol, to acquire and develop exciting new-generation oncology products," said Todd Ficeto, president and CEO of Hunter World Markets, in a news release.

Quest Group, based in Los Angeles, manufactures and distributes nutritional supplements in the United States and in Japan.

Vasogen's $16 million PIPE

In other biotech news, Vasogen said it secured agreements for a $16 million stock deal.

The company's stock got off to a rocky start after the announcement was made, giving up 14.1%, or 45 cents, by 9:41 a.m. ET. The stock went on to lose 13.8%, or 44 cents, to settle at $2.75 (Nasdaq: VSGN). In after-hours activity, the stock gained 3 cents.

A group of institutional investors has agreed to buy 4,923,077 shares at $3.25 each, a 1.8% premium to the company's $3.19 closing stock price on Thursday.

The investors also will receive warrants for 3.7 million shares, exercisable at $3.16 each for five years.

The shares are being sold under the company's shelf registration.

Rodman & Renshaw, LLC was the placement agent.

The placement is expected to close on May 24.

The proceeds from the deal will be used for working capital, including funding activities associated with the commercialization of the Celacade technology, the company's product used to activate an immune response to apoptosis, a psychological process that regulates inflammation.

Mississauga, Ont.-based Vasogen is a biotechnology company focused on treatments for neurodegenerative and cardiovascular disorders.

Arrowhead to raise $16.5 million

In the tech sector, Arrowhead Research Corp. announced its plans to close a private placement for $16,469,797.

The company plans to issue 2,849,449 units of one share and one quarter-share warrant at $5.78 each to York Capital Management and accredited investors. The whole warrants allow for the purchase of another share at $7.06 each.

Global Crown Capital, LLC is the placement agent.

The offering is expected to close early in the May 21 week.

The proceeds will be used to expand operations at the company's subsidiary, Unidym, which recently merged with Carbon Nanotechnologies, Inc. The rest will be used to make new investments in nanotechnology ventures.

"Since our original investment last year, Arrowhead has made demonstrable progress in each of their businesses," said Alexander Klabin of York Capital, in a statement.

"We are pleased to continue to support their growth by participating in this private offering."

"Global Crown Capital has shown commitment to nurturing companies in the expanding field of nanotechnology and brought an institution of exceptional caliber to this deal," said Arrowhead chairman R. Bruce Stewart in a statement. "Arrowhead is well-capitalized to continue to implements its current business plan."

On Friday, the stock gained 41 cents, or 6.22%, to close at $7.00 but gave up 3 cents in after-hours trading (Nasdaq: ARWR).

Located in Pasadena, Calif., Arrowhead develops nanotechnology used in life sciences, electronics and energy.

Aberdeen prices deal

Moving north of the border, Aberdeen International Inc. priced a C$60 million offering of subscription receipts.

The deal includes up to 75 million receipts at C$0.80 each.

The receipts are exchangeable for one unit of one share and one half-share warrant. The full warrants are exercisable at C$1.00 each for five years.

The deal is being placed through a syndicate of agents led by Orion Securities Inc.

The placement is set to close June 6.

The company will concurrently conduct a non-brokered offering of 500,000 receipts for proceeds of C$400,000.

On Friday, the company's stock gained 2 cents to close at C$0.92 (TSX Venture: AAB).

Toronto-based Aberdeen is a mineral exploration company.

Eastern Goldfields raises $3 million

In other resources news, Eastern Goldfields, Inc. wrapped a private placement for $3 million, selling 521,739 shares at $5.75 each.

The company plans to use the proceeds from the deal for drilling at its Lily mine, for underground mining, for continued exploration and for a planned secondary listing on the London Stock Exchange's Alternative Investment Market.

On Friday, the company's stock was unmoved at $5.95 (Pink Sheets: EGDD).

San Diego-based Eastern Goldfields is a gold exploration, mining and acquisition company focused on properties in southern Africa.

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