Pacific Ethanol to raise $84 million in stock deal; Newkirk Realty Trust seals $50 million PIPE

By Sheri Kasprzak

New York, Nov. 15 - Pacific Ethanol, Inc. led PIPE news in a session packed with substantial offerings.

The Fresno, Calif.-based company is sealing up an $84 million offering of series A cumulative redeemable convertible preferred stock.

Cascade Investment, LLC agreed to buy 5.25 million shares of the 5% preferreds at $16.00 each. The preferreds are initially convertible into a total of 10.5 million common shares at $8.00 each.

The financing, which is contingent upon shareholder approval, is expected to close in January.

Proceeds will be used to pay for part of the construction costs associated with ethanol plants on the West Coast.

Both the offering and the release of the company's third-quarter earnings report sent the stock up 12.35%, or $1.11, to end the day at $10.10.

"This investment represents a fundamental building block for our company as we pursue our business plan," said Bill Jones, the company's chairman, in a statement. "We are pleased to have gained the confidence of such a respected investment firm as Cascade Investment."

"Our mission is to be the leader in renewable fuels in the western United States," company chief executive officer Neil Koehler said in the company's statement. "This investment gives us the equity commitment required to quickly implement our plan to build out our first five ethanol plants. We are excited about the prospect of a long-term partnership with Cascade Investment as we bring new supplies of valuable domestic renewable fuels to the energy market."

According to the earnings report released Tuesday, the company sustained a net loss of $922,584 for the quarter ended Sept. 30, up from a net loss of $784,257 in the year-ago quarter.

Pacific Ethanol develops renewable fuels like bio-diesel.

Looking elsewhere in the PIPE market on Tuesday, Newkirk Realty Trust, Inc. wrapped a $50 million stock offering connected to its initial public offering.

The Boston-based firm issued 3,125,000 shares at $16.00 each to First Union. Under its $240 million IPO, Newkirk issued 15 million shares at $16.00 each.

Newkirk operates a real estate investment vehicle focused on commercial properties.

On Tuesday, the company's stock slipped 13 cents to close at $15.35.

In the broader private placement market Tuesday, one sellside source said the surge in offerings may be coming from a host of issuers looking to wrap up deals before the end of the year.

"Most of them are probably hoping to get it [the private placement] on their balance sheet before the year ends," he said. "Makes sense from that perspective."

As to whether the surge will last, the New York-based source said it's probably too soon to tell, but "it seems likely that until right around Christmas, we'll see quite a few things."

Peregrine leads Canadians

In an active day for Canadian PIPE issuers, Vancouver, B.C.'s Peregrine Diamonds Ltd. led a large pack of deals with the pricing of a C$40 million offering of special warrants.

The offering includes 8 million special warrants at C$5.00 each.

Each special warrant is exchangeable into a unit of one share and one half-share warrant once the amalgamation between Peregrine and Dunsmuir Ventures Ltd. is completed. The whole warrants are exercisable at C$7.00 each for 18 months.

The deal is being placed through a syndicate of placement agents led by Canaccord Capital Corp. The syndicate has an over-allotment option for up to 2 million units.

Peregrine is a diamond exploration, development and acquisition company.

Tusk Energy's C$24.5 million deal

Moving to the energy sector, Tusk Energy Corp. priced a private placement for up to C$24,551,250.

The company intends to sell 3.1 million class A special warrants at C$4.05 each and 2,285,000 class B special warrants, issued on a flow-through basis, at C$5.25 each.

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

The special warrants are exchangeable on a one-for-one basis for class A common shares and class B flow-through shares once it files a prospectus for the underlying shares.

Proceeds will be used for exploration and development.

Based in Calgary, Alta., Tusk is an oil and natural gas exploration company.

On Tuesday, Tusk's stock dipped C$0.06 to end at C$4.24.

Another Calgary-based oil explorer, Stylus Energy Inc., arranged a C$10,044,000 private placement.

The deal includes 1.39 million non flow-through shares at C$3.60 each and 1.12 million flow-through shares at C$4.50 each.

The deal is being placed through a syndicate of underwriters led by Peters & Co. Ltd.

Proceeds will be used for the company's 2005 and 2006 capital expenditure program. Proceeds from the flow-through share portion will be used for Canadian exploration expenses.

Stylus's stock remained unchanged at C$3.80 Tuesday.

Elsewhere in the energy sector, another Calgary-based company, Bonnett Energy Services Trust, negotiated a C$20 million deal comprised of trust units Tuesday.

The company plans to sell 1,438,849 units at C$13.90 apiece.

A syndicate of underwriters led by Raymond James Ltd. has a greenshoe for up to 575,540 additional units.

Bonnett provides wireline and testing services to the oil and natural gas exploration sector.

The company's stock lost C$0.32 to close at C$14.68 Tuesday.

Associated Brands raises C$11.75 million

Toronto's Associated Brands Income Fund wrapped up its previously announced C$11.75 million private placement of convertible debentures.

Torquest Partners Value Fund, LP and Torquest Partners Value Fund (Parallel Partnership No. 1) LP bought C$10 million of the 9% debentures while trustees of Associated Brands Operating Trust bought the rest.

The debentures mature Sept. 30, 2008 and are exchangeable for fund units at C$4.00 each.

Of the proceeds, C$3.6 million will be used for four capital projects the company hopes will improve operational efficiency, enhancing manufacturing capacity and flexibility. The rest will be used for financial restructuring.

"We are pleased to have increased the size of the debenture offering from the C$10 million originally contemplated, and with the strong vote of confidence expressed by our new financial partners and our lenders," said John Currie, the company's chairman, in a statement. "We are confident that we now have the necessary financial and operating flexibility until the numerous initiatives under way restore our historical track record of growth and stable performance."

On Tuesday, the company released its third-quarter earnings report.

For the quarter ended Oct. 1, the company reported a net loss of C$30.8 million compared with a net loss of C$1.3 million for the same quarter of 2004.

"While we are disappointed with our more recent results, we believe the reduction in cash distributions combined with our exchangeable debenture financing, will provide a firm financial base for the company to pursue its capital investment and business initiatives," said Rob Dougans, the company's chief executive officer, in a statement. "The additional flexibility achieved through reducing our senior indebtedness and renegotiating our new credit facility will allow us to focus on operations with a view to increasing revenues, improving margins and strengthening our organization."

The report knocked the company's stock down 19.42%, or C$0.80, to C$3.32.

Associated Brands makes and supplies dry-blend food products and household products.

Amkor stock up 0.5%

After pricing a $100 million convertible note offering Monday, Amkor Technology, Inc.'s stock edged up slightly on Tuesday.

The company's stock gained 3 cents, or 0.53%, to finish the day at $5.68, gaining another penny in after-hours trading.

On Tuesday, when the deal priced, the company's stock lost 21 cents to close at $4.37 but gained another 23 cents in after-hours trading.

The notes the company plans to sell are convertible into common shares at $7.49 each.

Based in Chandler, Ariz., Amkor assembles memory cards used in semiconductors.

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