Education Realty Trust wraps $70 million stock deal; sinking oil aids broader PIPE market, sellsiders say

By Sheri Kasprzak

New York, Sept. 23 - Education Realty Trust, Inc. led PIPE news to finish off the week with word that it is about to wrap a $70 million stock offering.

The Memphis-based company said it will issue 4,375,000 shares at $16.00 apiece to institutional investors on Sept. 30. On Aug. 12, the company had 22,034,000 outstanding common shares.

The offering was announced Friday morning, and Education Realty's stock gained $0.22 on the day to close at $16.70.

Education Realty acquires and operates collegiate student housing.

Neither Paul Bower, the company's chief executive officer, nor Randy Brown, the chief financial officer, responded to calls for additional comment on the offering by press time Friday.

The company plans to use the proceeds to partially fund its acquisition from Place Properties, LP a portfolio of 13 collegiate student-housing communities in six states. The acquisition, which is expected to cost $195 million, is expected to close in the fourth quarter.

On the earnings front, Education Realty Trust sustained net losses in the second quarter of 2005 after posting meager gains for the second quarter of 2004.

For the quarter ended June 30, 2005, the company reported a net loss of $4.06 million, compared to a net gain of $99,000 for the corresponding quarter of 2004.

In other PIPE news Friday, market sources said a substantial drop in oil prices could mean better private placement volume in the coming week. Sellsiders agreed earlier this week that fears over Hurricane Rita's potential economic impact may have kept U.S. PIPE issuers out of the market.

Oil prices sank $2.31 Friday to close at $64.19 per barrel.

"It's picking up some today," said one sellsider. It "looks like it [the hurricane] won't be as bad as folks had originally anticipated so some of the fear is abating. This week, look for more pharma deals, probably some smaller tech deals."

Another source in Canada said energy companies have been crawling out of the woodwork this week anticipating higher oil prices - and higher energy stocks - as Rita moved in. That may change this coming week, he said, as oil prices retreat.

"It looked for a while there like oil was about to surge up near $70 [per barrel] again and at that point, we probably would have seen a lot more [energy offerings]," the sellsider said. "As it is, [issuers] may back off."

Rentech's $30.9 million direct deal

Moving to direct placements, Denver's Rentech Inc. wrapped up a $30,902,800 direct offering on Friday, selling 13,436,000 shares to a Boston-based Wellington Management Capital, LLP on behalf of its client accounts.

The shares were sold at $2.30 each under Rentech's shelf registration.

The company had 93,567,073 outstanding common shares as of Aug. 5, according to the company's latest earnings report.

Rentech's stock jumped 11.16%, or $0.27, to close at $2.69 after the deal was announced Friday morning.

Proceeds from the offering will be used for commercialization efforts on the company's coal-to-liquids opportunities. The rest will be used for general operations.

Rentech develops gas-to-liquids and coal-to-liquids processes used to convert synthetic gas into fuel.

"Rentech is very pleased to have been able to acquire the funding at this strategic period in relation to the United States and its energy situation," said D. Hunt Ramsbottom, the company's president, in a statement. "The proceeds will provide the necessary capital to move forward with the company's [coal-to-liquids] agenda as we pursue several large commercial projects for coal-to-liquids, which Rentech is considering either on an ownership basis or for licensing its patented and proprietary technology.

"The funds assist in the solidification of our general financial situation, which we discussed as part of our four-point plan in the company's investors' conference call this week.

"Coal-to-liquids is gaining momentum as a clear and clean alternative solution for the use of our largest domestic energy resource - coal. It can be used to produce fuels and chemicals for the country and help to reduce foreign dependency on oil as well as having the potential to stabilize energy costs over the long term."

According to it latest earnings statement, Rentech's net loss climbed significantly over the second quarter of 2004.

For the quarter ended June 30, 2005, the company sustained a net loss of $2,462,743, up from $1,184,087 for the same quarter of 2004.

Net losses have, according to the statement, been a problem for the company since the beginning.

"From the company's inception on Dec. 18, 1981 through June 30, 2005, the company has incurred losses in the amount of $65,740,165," the statement said. "For the nine months ended June 30, 2005, the company recognized a $9,603,804 net loss from continuing operations. If the company does not operate at a profit in the future, the company may be unable to continue its operations at the present level."

Transgenomic raises $15.15 million

In the biotech sector, Transgenomic Inc. announced that it received commitments from a group of institutional investors for its $15.15 million private placement.

The company plans to sell 15 million shares at $1.01 each to institutional investors led by Lehman Brothers on Oct. 31.

The investors will also receive warrants for 6 million shares, exercisable at $1.20 each.

About $9 million of the proceeds received from the deal will be used to repay debt owed to Laurus Master Fund, Ltd., and the rest will be used for working capital.

Oppenheimer & Co. was the placement agent.

Based in Omaha, Neb., Transgenomic produces systems used in genetic research and molecular diagnostics.

On Friday, Transgenomic's stock dipped C$0.04 to finish at C$0.99.

InterRent closes C$5.42 million deal

Elsewhere in Canada Friday, Toronto-based InterRent International Properties Inc. led PIPE news there with the closing of a C$5,417,000 convertible debenture offering.

The 7.25% subordinated convertible debentures mature in five years and are convertible into common shares at C$0.55 each.

The proceeds will be used for property acquisitions and general corporate purposes.

Canaccord Capital Corp. was the placement agent.

InterRent owns and operates multi-residential real estate within the Toronto metropolitan area.

"Proceeds of this offering will allow InterRent to capitalize on significant accretive acquisition opportunities, several of which have already been announced," said Michael Newman, the company's president and chief executive officer, in a statement. We expect the net proceeds from this financing to be fully deployed within the next three months."

InterRent's stock remained unchanged at C$0.46 Friday.

Canadian energy offerings

Elsewhere in Canada Friday, a smaller group of energy offerings was priced, led by a C$5,031,250 deal negotiated by Rosetta Exploration Inc.

Calgary, Alta.-based oil and natural gas explorer intends to sell 5.75 million flow-through shares at C$0.875 each.

Acumen Capital Finance Partners Ltd. is the placement agent.

The proceeds will be used for working capital.

The offering was announced late Thursday, and by the close of the market Friday, Rosetta's stock had gained 5.88%, or C$0.05, to close at C$0.90.

Another Calgary-based oil exploration company, Arapahoe Energy Corp., priced a C$2 million stock offering on Friday.

The company intends to sell 1,333,333 flow-through shares at C$0.75 each and 1,538,462 non flow-through shares at C$0.65 each.

Dominick & Dominick Securities Inc. is the placement agent.

Proceeds will be used for the company's 2005 drilling program and for working capital.

After announcing the deal Friday morning, Arapahoe's stock gained 11.3%, or C$0.07, to close out the day at C$0.69.

Delta Petroleum stock slips

Looking elsewhere in the energy sector, Delta Petroleum Corp.'s stock finished the day off 1.3% Friday after announcing the pending settlement of a $100,000,233 private placement.

The company's stock dipped $0.26 to close at $19.69 before gaining a penny in after-hours trading.

The offering was announced early Thursday afternoon, and Delta's stock gained $0.35, or 1.79%, to close at $19.95 before losing $0.05 in after-hours trading.

The Denver-based oil exploration company is gearing up to close a private placement of shares sold at $18.50 each to institutional investors.

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