PIPE volume trails off again on lower stocks; Nuvelo raises $75 million from equity line

By Sheri Kasprzak

New York, Aug. 4 - Private placement volume fell off again Thursday as the week winds down and stocks retreated on higher oil prices.

According to one sell-sider, the combination of lower stocks and the approaching weekend are likely factors in why volume slipped on Thursday after making such a strong comeback on Wednesday.

"Well, yesterday stocks were better, and they have been performing pretty well for the better part of the week," he said. "It's just getting later in the week though and I think this tends to happen a lot. I don't think it has much to do with demand or anything like that. Just the regular flow of the market."

Oil prices stayed above $60 per barrel, fueling a flood of activity in that sector in both the United States and Canada.

Despite a drop in oil prices Wednesday, one market source in Canada said the dip doesn't make that much of a difference to PIPE issuers because oil prices are at all-time highs.

"When you're talking about prices over $60 per barrel, that's pretty enormous and it's going to have a positive impact on energy stocks, so those things benefit [issuers]," he said. "A dip of a dollar isn't going to amount to anything when a barrel costs more than $60 already."

On Thursday, oil gained $0.52 to end at $61.38 per barrel.

Back in the United States, Nuvelo, Inc. led private placement news with word that it sealed up a $75 million committed equity financing facility from Kingsbridge Capital Ltd.

The Sunnyvale, Calif.-based biopharmaceutical company may sell shares to Kingsbridge over the course of three years at the greater of $2.50 per share or 85% of the company's share price the day before each draw.

The shares will be drawn in tranches of the lesser of $10 million each or 2.5% of the company's market capitalization at the time of draw.

The investor also received warrants for 350,000 shares, exercisable at $12.07 each - a 30% premium to the company's average closing stock price for the five trading days before the agreement date. The warrants expire in five years.

Nuvelo is focused on therapies for cancer and cardiovascular ailments. The proceeds will be used for clinical and corporate development.

The company's stock lost $0.32 to end at $9.09 Thursday.

Flood of oil activity

Several oil offerings closed Thursday, led in size by a $20 million convertible note deal wrapped by Calgary, Alta.-based JED Oil Inc.

The note, sold to JED Funding, Ltd., bears interest at 10% annually, matures on Feb. 1, 2008 and is initially convertible into 666,667 common shares at $30.00 each.

The company plans to use the proceeds to accelerate drilling on its properties in the United States and Canada.

"Due to the substantial inventory of drilling projects resulting from Enterra Energy Trust's proposed acquisition of High Point Resources, combined with the anticipated development drilling based on the current drilling results to-date in the Bakken play in North Dakota, it was determined that, in addition to contemplated bank debt, this financing was required to contract for five additional drilling rigs and accelerate the increasing number of drilling programs in our business plan," said Tom Jacobsen, JED's chief executive officer.

"The number of drilling locations that have been identified on the High Point lands has increased to approximately 120."

JED's stock closed down $0.30 at $28.63.

Among the new oil offerings announced Thursday was a C$11.1 million stock offering from Burmis Energy Inc.

Burmis, another Calgary-based oil exploration company, intends to sell 3 million shares at C$3.70 each.

FirstEnergy Capital Corp. will lead a syndicate of underwriters for the offering, the proceeds of which will be used to expand the company's 2005 capital program.

Burmis's stock slipped C$0.05 to close at C$3.85.

Another deal priced Thursday was Find Energy Ltd.'s C$7.6 million offering comprised of 1 million flow-through shares at C$7.60 each.

FirstEnergy Capital Corp. will also lead a syndicate of underwriters on that offering, the proceeds of which will be used for ongoing exploration.

Find is yet another Calgary-based operation. The company's stock gained C$0.40 to end at C$6.40 Thursday.

Finally, Cruiser Oil & Gas Ltd. priced a C$6.5 million offering of flow-through and non flow-through shares.

The company plans to sell up to 5 million non flow-through shares at C$0.30 each and up to 14,285,714 flow-through shares at C$0.35 each.

Placement agent Acumen Capital Finance Partners Ltd. has an over-allotment option for up to 5 million additional common shares and up to 5,714,286 additional flow-through shares.

Proceeds will be used for exploration and development as well as for working capital.

Cruiser is also based in Calgary. It stock dipped C$0.01 to end at C$0.45 Thursday.

WorldGate raises $17.5 million

WorldGate Communications, Inc. closed a $17.5 million stock offering Thursday.

The Trevose, Pa.-based wireless phone product developer issued 4,666,667 shares at $3.75 each to institutional investors led by funds managed by Satellite Asset Management, LP.

WorldGate also issued warrants for 1,633,333 shares, exercisable at $5.00 each for five years. The investors also received an additional investment right for 1,554,000 additional shares, exercisable at $4.12 each.

SG Cowen & Co., LLC was the placement agent.

"Now, with this funding, we have solidified our financial flexibility and capacity to continue the [research and development] effort, make further advancements in the promise of video telephony and greatly improve our competitive positioning," said company chairman and chief executive officer Hal Krisbergh, in a statement.

Central European's stock dips

After closing a $116,558,400 private placement on Wednesday, Central European Distribution Corp.'s stock slid on Thursday.

The company's stock dropped $0.89, or 2.29%, to close at $37.98.

On Wednesday, when the closing was announced, the company's stock climbed $0.62 to close at $38.87, slipping $0.03 in after-hours trading.

The Bala Cynwyd, Pa.-based alcoholic beverage importer sold shares at $34.69 each. The price per share is a 7% discount to the trailing 15-day closing average share price.

Along with the announcement of the private placement, Central European also released its second-quarter earnings report on Wednesday.

Central European distributes and imports alcoholic beverages produced in Poland.

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