Whitehall Jewelers seals $50 million stock sale as part of merger with BTHC

By Sheri Kasprzak

New York, July 31 - Heading up a reasonably active day in PIPEs, Whitehall Jewelers, Inc. closed a $50 million offering of shares as part of its reverse merger with BTHC VII.

The offering was downsized from the originally planned $65 million placement.

Whitehall sold 14,619,883 shares at $3.42 each. The investors received warrants for 7,309,939 shares, exercisable at $4.10 each.

Roth Capital Partners, LLC was the placement agent.

The company used $35 million of the proceeds to repay debt under its senior term loan facility. The rest will be used for merger-related costs, sales and marketing and capital expenditures.

In the reverse merger, Whitehall's existing shareholders were issued 24,853,801 shares of BTHC VII common stock.

Chicago-based Whitehall Jewelers is a fine jewelry retailer.

In the broader market, stocks continued to slide after making a brief comeback. The Dow Jones Industrial Average fell by 146.32 to close at 13,211.99 on Tuesday. The Nasdaq composite index gave up 37.01 to settle at 2,546.27, and the Standard & Poor's 500 composite index settled down by 18.64 to close at 1,455.27.

As to what may be coming up in the near future, a market insider said Tuesday that tech offerings may be in the market en masse.

"Look for tech," he said. "Tech stocks have been performing pretty well and I've seen quite a few here, so I think that's the place to look over the next couple of weeks."

Orthovita's $32.5 million deal

Elsewhere, Orthovita, Inc. completed a $32,517,054 offering of stock, selling 12,317,066 shares at $2.64 each to a group of institutions.

Essex Woodland Health Ventures Fund VII, LP; Lehman Brothers Inc.; Magnetar Capital Master Fund, Ltd.; W.H.I. Growth Fund Q.P., LP; WHI Select Fund, LP; Panacea Fund, LLC; and Stephen F. Wiggins bought the shares and also purchased $25 million in notes with warrants. The note offering is for up to $45 million.

The 10% notes are due July 30, 2012 and include warrants for 1,466,276 shares, exercisable at $3.41 each through July 30, 2012.

So far, the company has sold $25 million in principal of the notes.

On Tuesday, Orthovita's stock gained 8 cents, or 2.52%, to settle at $3.25 (Nasdaq: VITA).

Orthovita, based in Malvern, Pa., develops synthetic biomaterials used in spinal surgery.

Tix settles deal

In other news, Tix Corp. wrapped a private placement for $12.564 million.

The company issued 2,645,053 shares at $4.75 each and warrants for 1,322,526 shares, exercisable at $5.50 each for two years.

News of the offering, released early Tuesday, sent the company's stock up by 10.84%, or 66 cents, to close the day at $6.75 (OTCBB: TIXC).

The company expects to close another tranche of the placement.

"This capital infusion will greatly assist Tix in moving forward with our expansion plans, including the acquisition of Exhibit Merchandising; growth operation of our existing ticketing businesses; and, most importantly, assure our shareholders that we have the capital and human resources to be an innovative leader in all areas of our expanding operations," said Mitch Francis, Tix's chief executive officer, in a statement.

Based in Studio City, Calif., Tix operates Tix4Tonight, which sells tickets for Las Vegas shows, concerts, attractions and sporting events.

Identity Rehab raises $3.7 million

In the tech sector, Identity Rehab Corp., which conducts business as ID Watchdog, sold $3.7 million in 9% convertible notes.

The notes have a two-year term. The conversion terms were unavailable by press time Tuesday.

Proceeds will be used to launch ID Watchdog's marketing program, strengthen its operations and grow its subscriber-based business. The rest will be used for working capital.

Aspenwood Capital was the placement agent.

"Given the reputation of ID Watchdog and the growing threat of identity theft, we expected and realized a high level of investor interest for this relatively early stage company," said Aspenwood Capital partner Steve Ossello in a news release.

"Thanks to ID Watchdog's management team, we were happy to expand the offering to accommodate the additional investor interest."

"The private placement was a success for ID Watchdog," said Justin Yurek, ID Watchdog's president, in a statement.

"Working with Aspenwood, we had the benefit of a local company with an in-depth understanding of our company and how to sell our securities, and strong relationship with institutional and high net-worth investors accustomed to investing in companies the size of ID Watchdog."

Denver-based Identity Rehab operates ID Watchdog, an identity theft protection company.

Zippi stock dips

A day after settling a $10 million placement of convertible notes, Zippi Networks, Inc.'s stock gave up 1.79%.

The stock closed down by 2 cents to end at $1.10 (Pink Sheets: ZPNW).

On Monday, when the deal closed, the company's stock fell by a penny to end at $1.12.

Palm Valley bought the notes.

Completion of the placement was contingent upon the company's ability to complete its product suite and was based upon specific milestones reached by the company.

San Jose, Calif.-based Zippi provides online tools and strategies to online sellers.

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