U.S. Shipping prepares to wrap $76.91 million PIPE; MFC Development closes $5.77 million note sale

By Sheri Kasprzak

New York, Aug. 7 - A long-haul marine transport company headed up PIPE activity to kick off the week as oil prices shot up and stocks sagged.

U.S. Shipping Partners LP secured $76,914,000 from a private placement of 1.3 million common units and 3.1 million class B units.

A group of investors agreed to buy 1.3 million common units at $18.34 each and 3.1 million class B units at $17.12 each.

The class B units are subordinated to the common units and may be converted into common units. If the conversion of the B units is not approved by unit holders within 180 days, the minimum quarterly distribution will be increased to $0.5175 compared to the present $0.45.

The offering was first announced without terms on July 19.

Proceeds from the deal will be used for construction expenses related to the company's joint venture with National Steel and Shipbuilding Co. to build nine double-hulled tankers.

Also on Monday, U.S. Shipping announced its second-quarter earnings. The company reported revenues of $37.8 million for the quarter ended June 30, up from revenues of $33.8 million for the same quarter of 2005.

On word of the offering and the earnings statement, U.S. Shipping's stock took a dip, losing 99 cents, or 4.72%, to close at $20.00 (NYSE: USS).

U.S. Shipping, which has headquarters in Edison, N.J., provides long-haul marine transportation services for the refined petroleum products sector.

In the broader market, as stocks closed lower, oil prices skyrocketed on news that BP Alaska Exploration Inc. shut down one of its pipelines. The shutdown means a major blow to oil supply in the United States, but one sellside market source based in Canada said the jump is likely news-based and may be temporary.

"Whenever it's news-linked like this, it tends to settle down a bit once the smoke clears," he said. "But the reality is, we're in the summer and there is still a huge demand, so [oil] prices are likely to go up quite a bit before they go down."

Oil prices ended the session up $2.22 at $76.98 per barrel.

Meanwhile, the Dow Jones Industrial Average lost 20.97 to end at 11,219.38; the Nasdaq composite index fell 12.55 to close at 2,072.50; and the Standard & Poor's 500 composite index gave up 3.59 to settle at 1,275.77.

MFC raises $8.66 million

Elsewhere in PIPE activity, MFC Development Corp. closed two installments of a proposed $8,663,100 private placement for $5,775,400.

Gottbetter Capital Partners, LLC bought 10% senior secured convertible notes in the offering. The notes due July 31, 2009 are convertible at a price equal to 80% of the average of the two lowest daily volume weighted average prices for the 25 trading days before conversion with a $0.69 floor.

In the initial round, the investor received five-year warrants for 3 million shares, exercisable at $0.75 each.

Another $2,887,700 in principal of the notes will be issued within 30 days of the filing of a registration statement with the Securities and Exchange Commission.

Proceeds will be used for working capital and general corporate purposes.

"We expect the funds derived from the transaction announced today to provide an important infusion of working capital and the financial flexibility to continue to execute our business strategy," said Nancy Duitch, the company's chief executive officer, in a statement released Monday morning. "The company expects to use the financing proceeds for the expansion of its marketing efforts, including product development, inventory acquisition and media distribution, and for other general corporate purposes."

The company's stock closed unchanged at $0.65 (OTCBB: MFCD).

Los Angeles-based MFC is a consumer product branding, marketing and distribution company.

Wave Systems' direct placement

Moving to the technology sector, Wave Systems Corp. completed a direct placement for $4,790,342.

The company issued 2,336,752 class A shares at $2.05 each. The shares were priced at par with the company's closing stock price on Thursday.

The shares were sold under the company's shelf registration.

Security Research Associates was the placement agent for the offering.

Proceeds will be used for ongoing operations.

"This financing helps to solidify our capital position and provides funding needed to support our operations," said Wave CEO Steven Sprague in a news release. "Despite challenging conditions in the equity markets in recent weeks, we are pleased to have priced this financing at last Thursday's closing price. We appreciate the participation of both new and existing investors in this funding."

The stock lost a penny on Monday to close at $2.20 (Nasdaq: WAVX).

Based in Lee, Mass., Wave Systems is a software company focused on authentication, data protection and password management. The company's products are used mostly by corporate and government entities.

DHB stock edges up

After completing a private placement for $14,824,998 late last week, DHB Industries, Inc. saw its stock climb slightly.

The stock advanced by 3.93%, or 11 cents, to end Monday at $2.91 (Pink Sheets: DHBT). The company's stock gained 4.4%, or 11 cents, on Thursday when the deal closed to end at $2.61, and on Friday, the stock gained 19 cents to end at $2.80.

In the private placement, DHB sold shares at $4.93 each to former chief executive officer David H. Brooks.

Brooks also exercised existing warrants for 3.75 million shares for proceeds of $8.25 million.

The offering was conducted as part of a settlement agreement connected to a class action securities lawsuit against the company and some of its former and current directors and officers by investors who purchased shares of DHB between April 2004 and August 2005.

The suit, filed in September 2005, alleged that DHB violated federal securities laws by issuing false and misleading statements that inflated the market price of its securities.

The total settlement is equal to $22,324,998 with the placement making up the majority. The settlement funding has been placed in escrow pending approval from the U.S. District Court for the Eastern District of New York.

DHB Industries, based in Pompano Beach, Fla., develops and manufactures body armor.

InSite stock climbs again

In the biotech sector, InSite Vision Inc.'s stock advanced by 4.73% on Monday after the company settled a $6,288,000 private placement on Thursday.

The company's stock gained 8 cents to end at $1.77 Monday (Amex: ISV). When the placement closed - and the company announced that it had two abstracts related to the second trial of its AzaSite product for presentation by the American Academy of Ophthalmology approved - the stock gained 13.64%, or 18 cents, to end at $1.50. The stock climbed by 19 cents on Friday to close at $1.69.

AzaSite is used to treat bacterial conjunctivitis.

In the placement, the company received agreements from some of its current investors for shares at $1.31 each.

RBC Capital Markets Corp. was the placement agent.

Proceeds will be used for the development of In Site's AzaSite to treat bacterial conjunctivitis and for other general corporate purposes.

Based in Alameda, Calif., InSite develops treatments for disorders of the eye.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.