MannKind to raise funds, reduce debt; Green Mountain eyes $250 million; Silver Quest ups deal

By Stephanie N. Rotondo

Portland, Ore., Aug. 11 - MannKind Corp. said it had inked private placement agreements with two investors on Wednesday.

The financing is expected to create total value of about $230 million and will also result in the reduction of debt. A company spokesperson said the transactions would give the company funding through the end of 2011.

Meanwhile, Green Mountain Coffee Roasters Inc. announced a $250 million private placement with a single investor. The investor and the company are also looking at partnering on a new venture.

Silver Quest Resources Ltd. upsized its previously announced private placement of stock and units, according to a press release. The company - which now intends to raise a maximum of C$8 million - said the increase was due to strong interest.

In news from Down Under, Coretrack Ltd. brought an A$2.5 million private placement of stock to market, while Eleckra Mines Ltd. said it was seeking A$2.47 million via a private placement of equity.

MannKind to raise funds

MannKind, a Valencia, Calif.-based biopharmaceutical company, announced two private placements of equity along with a debt reduction plan.

Seaside 88, LP and The Mann Group LLC - a company owned by Alfred Mann, chief executive officer of MannKind - are the investors.

According to the terms of the agreement with Seaside, the company will issue up to 18.2 million common shares over the next year, with tranches settling every two weeks beginning Sept. 22. The shares will be issued at an 8% discount to the 10-day volume weighted average price, with a floor price of $6.50 per share.

Hakan S. Edstrom, president and chief operating officer of MannKind, told Prospect News that a "fair assessment" of the total expected proceeds from the transaction would be about $100 million to $110 million.

Meanwhile, under the agreement with the Mann Group, MannKind will sell another 18.2 million shares. However, the investor is paying a higher price per share "because [Mann, CEO] is an insider," Edstrom said.

The shares will be sold at the undiscounted closing bid price of the common stock on the trading day immediately preceding the closing date, with a floor of $7.15.

In consideration for the shares, the Mann Group will reduce the amount of an outstanding loan previously given to MannKind. Edstrom said the transaction could reduce the $252 million principal amount of the loan by about $115 million.

"It's good for the company because we are not carrying a big loan balance on our balance sheet," Edstrom explained.

All told, the total value of the deals would be "in excess of $230 million," he added.

Prior to inking the financing agreements, MannKind had enough cash to take it through early 2011, according to Edstrom. With a new drug candidate in the pipeline waiting to be approved, the agreements are the company's way of "making sure we are well financed up to that date.

"We wanted to make sure we had adequate funding through 2011," Edstrom said.

Edstrom noted that the structure of the deal was "very interesting."

"If the stock continues to appreciate, we will continue to get more and more money," he said. The investors' participation also "demonstrates their confidence in our company."

Additionally, the setup "minimizes dilution because hopefully we'll have appreciation over time.

"We thought it was a very good opportunity for the company in preparing for commercial launch," he concluded.

MannKind's stock (Nasdaq: MNKD) fell 30 cents, or 4.20%, to $6.85. Market capitalization is $779.26 million.

Green Mountain to get $250 million

Green Mountain Coffee will pocket $250 million via a private placement of stock, according to a regulatory filing and subsequent press release.

Luigi Lavazza SPA is the sole investor.

The Waterbury, Vt.-based specialty coffee company will sell common shares to the investor at a 7.5% discount to the 60-day volume-weighted average price of the stock.

Additionally, Green Mountain and the investor have agreed to partner in a pursuit to develop and manufacture new single-serve espresso machines and single-serve espresso capsules designed for use with such machines.

"Lavazza's investment in GMCR reflects their confidence in our strategy, vision and execution and provides enhanced financial flexibility to fund our growth and future enabling initiatives," said Lawrence J. Blanford, president and CEO, in the release. "We have developed an effective working relationship with Lavazza and, based on the impressive quality of the Lavazza people and technology, we believe there is strong potential for a commercial alliance between GMCR and Lavazza that will leverage our complementary coffee systems and respective geographic strengths."

Green Mountain's equity (Nasdaq: GMCR) lost 49 cents, or 1.56%, to $30.97. Market capitalization is $4.08 billion.

Silver Quest deal increased

Silver Quest Resources announced it had upsized a previously reported private placement of units and equity to C$7.5 million from C$5.5 million.

A C$500,000 greenshoe was also added.

The financing originally priced Aug. 9. The company said the increase was due to strong interest, according to a press release.

Silver Quest will sell $3.5 million of units at C$0.65 each. The units will contain one common share and one half-share warrant.

The warrants are exercisable at C$0.75 for two years, representing a 5.63% premium over the Aug. 9 closing share price of C$0.71.

Also, the company will issue $4 million in flow-through common shares, with each share selling at C$0.75.

Proceeds will be used for exploration and working capital. Settlement is expected by Aug. 25.

Calls seeking comment were not returned on Wednesday.

Silver Quest's shares (TSX Venture: SQI) slipped 8 cents, or 10.67%, to C$0.67. Market capitalization is C$45.36 million.

Silver Quest Resources is a Vancouver, B.C.-based mineral exploration company.

Coretrack heralds convert sale

East Perth, Australia-based Coretrack brought an A$2.5 million private placement of 9.5% convertible notes to market.

Coretrack will issue 50 of the 18-month notes at A$50,000 each. The notes are initially convertible into ordinary stock at A$0.22 per share, reflecting a 22.22% premium over the Aug. 10 closing share price of A$0.18.

The notes also carry a clause allowing for the notes to be converted at the lesser of A$0.22 or 80% of the daily volume weighted average sale price of the shares for the five trading days immediately prior to the conversion notice after six months.

Interest on the notes is calculated daily and is payable quarterly.

"The funds will be applied towards the auxiliary support equipment for the GT3000 drill rig, required to commence commercial operations, and general working capital," the company said in a press release.

"This is a good deal, which protects current shareholders, while strengthening our investor base with sophisticated and institutional investors that see the great potential the company has to offer the energy market," commented Nanne van't Riet, managing director, in the release.

Coretrack's stock (Australia: CKK) closed at A$0.17.

Coretrack is a provider of technological solutions to the oil and gas industry.

Eleckra sells discounted stock

Eleckra Mines is seeking A$2.47 million from a private placement of ordinary shares, according to a press release.

The company intends to sell 29 million of the shares at A$0.085 each. The price per share represents a 15% discount to the A$0.10 closing share price on Aug. 10.

Proceeds will be used for gold exploration and evaluation programs at Eleckra's Yamarna Project, as well as for working capital.

Eleckra's equity (Australia: EKM) ended at A$0.087.

Eleckra Mines is a West Perth, Australia-based mineral exploration company.

Blackline to sell units

Blackline GPS will raise C$2 million from a private placement of units, the company said in a press release.

Blackline will sell 20 million of the units at C$0.10 each. The units will hold one common share and one half-share warrant.

Whole warrants are exercisable at C$0.20 for one year. The strike price reflects a 90.48% premium over the Aug. 10 closing share price of C$0.105.

Proceeds will be used for general corporate and working capital purposes. Settlement is expected by Aug. 17.

Blackline's shares (TSX Venture: BLN) closed up 40% to end at C$0.14 on Wednesday. Market capitalization is C$10.5 million.

Blackline GPS is a Calgary, Alta.-based designer and manufacturer of products and services that combine wireless technology and global positioning systems.

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