Cell Genesys to close $60 million direct stock sale; Red Rock grabs $20 million equity line

By Sheri Kasprzak

New York, April 11 - Cell Genesys, Inc. led private placement action Wednesday with word that it will close a $60 million registered direct placement of its stock early next week.

Institutional investors plan to buy 10,810,811 shares of the company at $5.55 each under the company's shelf registration. The share price is an 8.7% discount to the company's $6.08 closing stock price on Tuesday.

The investors also will come away from the deal with five-year warrants for 2,162,162 shares. The strike price of the warrants could not be confirmed by press time Wednesday.

Credit Suisse Securities (USA) LLC is the bookrunner for the deal, set to close Monday.

Proceeds will be used for the ongoing phase 3 trials of the company's GVAX product for prostate cancer. The rest will be used for the development of other product candidates and for general corporate purposes.

News of the deal sent the company's stock down early, losing 65 cents, or 10.7%, by 9:50 a.m. ET. The stock ended the day down 12.34%, or 75 cents, at $5.33 (Nasdaq: CEGE). The stock gave up another 3 cents in after-hours trading.

Volume was also off slightly with 15,367,977 shares traded, compared with the average 20,122,300 shares.

Even so, one buyside source said he is still confident in the company.

"They're well-funded," he said. "They have some promising new products that are in phase 3 trials right now. You know, the discount to me doesn't seem that big. I'm sure they wanted to sell at a premium but with the [stock] market the way it is, you get what you can. I still feel good about them. I'm holding."

Cell Genesys most recently tapped the PIPE market in February with a $75 million equity line obtained through Kingsbridge Capital Ltd.

Under the line, Kingsbridge may buy shares at discounts ranging from 6% to 10%, depending upon the market price during an eight-day pricing period.

Cell Genesys, based in South San Francisco, Calif., develops treatments for cancer.

Red Rock details $20 million SEDA

Elsewhere in the PIPE market Wednesday, Red Rock Pictures Holdings, Inc. released the details on its previously mentioned $20 million standby equity distribution agreement with Cornell Capital Partners, LP.

In the two-year deal, Cornell may buy shares at 97% of the market price during a five-day pricing period following the notice of a draw. There is a $2 million cap on each advance.

Cornell received warrants for 56,247 shares, exercisable at $2.6668 each.

Newbridge Securities Corp. was the placement agent.

The company's stock remained unchanged Wednesday at $2.85 (OTCBB: RRPH). When the deal was announced Tuesday, the stock gained 3 cents to close at $2.85.

Located in Los Angeles, Red Rock finances and co-produces feature films and entertainment.

Patrick raises $11.03 million

In other PIPE news, Patrick Industries, Inc. pocketed $11.025 million from a stock deal connected to its planned $75 million acquisition of Adorn, LLC.

News of the deal and the acquisition sent the company's stock up 10.62% on Wednesday, or $1.22, to close at $12.75 (Nasdaq: PATK).

The company issued 980,000 shares at $11.25 each to Tontine Capital Partners, LP and Tontine Capital Overseas Master Fund, LP.

The investors agreed to provide an interim debt financing of up to $16.5 million but not less than $13.975 million in senior subordinated notes.

Proceeds from the agreement will be used to fund its acquisition of Adorn, an Indiana-based manufacturer of interior components for recreational vehicles and manufactured housing. The acquisition is expected to cost $75 million in cash.

Also, Patrick Industries received a commitment letter from J.P. Morgan Securities Inc. and JP Morgan Chase Bank NA to establish a senior credit facility comprised of a revolving credit line and a term loan facility to additionally finance the acquisition.

With headquarters in Elkhart, Ind., Patrick Industries manufactures building supplies used in the manufactured housing sector.

Eloda's C$15 million deal

Heading north of the border, Eloda Corp.'s stock slid by 10% after the company announced plans to price a C$15 million offering.

The stock fell by 6 cents on Wednesday to close at C$0.54 (TSX Venture: ELA).

The pricing terms of the deal have not been set, but Research Capital Corp. is the placement agent.

Montreal-based Eloda provides independent, third-party validation tools used by the advertising industry.

Action Energy prices PIPE

In other Canadian private placement activity, Action Energy Inc. negotiated the terms on a C$12.008 million private placement.

The deal includes up to 3.16 million flow-through shares at C$3.80 each.

A syndicate of agents led by Wellington West Capital Markets Inc. has a greenshoe for up to 790,000 additional shares.

The placement is expected to close May 1.

Proceeds will be used for the company's 2007 exploration program.

On Wednesday, the company's stock gained a penny to end at C$3.11 (TSX Venture: AEC).

Calgary, Alta.-based Action is an oil and natural gas exploration, development and production company focused on projects in Alberta and Saskatchewan.

Sino-Forest stock climbs

In secondary market action, Sino-Forest Corp. saw its stock edge up on Wednesday after announcing the completion of a C$232.41 million non-brokered private placement.

The company's stock gained 4 cents to settle at C$13.87 (Toronto: TRE). On Tuesday, when the offering was announced, the stock closed up 13 cents at C$13.83.

In the placement, a group of investors led by Temasek Holdings and United Capital Investments Group bought shares at C$9.15 each.

Proceeds will be used for the acquisition of standing timber, the construction or acquisition of a processing facility and for working capital.

Sino-Forest, based in Toronto, is a commercial forestry plantations operator in China.

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