PIPE volume weakens at week's end due to lower stocks; PPOL wraps $10.2 million offering

By Sheri Kasprzak

Atlanta, June 3 - Private placement volume trailed off Friday as stocks dipped, but sell-side sources asserted their confidence that biopharmaceutical companies will stay in the market - at least for the short term.

Oil companies have also been getting back into the PIPE market since oil prices have made significant gains this week. The return of energy companies to the private placement arena may continue into next week, one market source said, given that fact that oil prices continue to rise.

"Not too many today," said the Canadian source. "But oil was back up today, so expect at least a few on Monday. It generally takes a while for the pricing to affect issuance."

Oil jumped $1.40 on Friday to close at $55.03 per barrel.

Stocks, however, took a turn downward on the higher oil prices. The Dow Jones Industrial Average lost 92.52 to close at 10,460.97; the Nasdaq composite index slid 26.37 to close at 2,071.43 and the S&P 500 edged down 8.27 to close at 1,196.02.

Market sources said they saw many deals from the surge of tech offerings introduced last week and the week before wrap up Friday.

"We're not seeing so many tech deals as last week," said one sell-sider familiar with that sector. "Mostly just closing those deals at this time."

Among those deals being wrapped up was a $10,196,516 offering from PPOL, Inc., a Los Angeles-based holding company for a business that produces a fax-based networking device.

The company sold 2,549,129 shares at $4 each to four institutional investors related to the company's acquisition of K.K. U Service.

PPOL bought all of K.K. U's stock for ¥380 million, or $3,522,432.

K.K. U develops, imports and exports telephone, fax, copier, computer and peripheral equipment.

PPOL's stock closed down $0.05 at $3.85 on Friday.

Remote Dynamics' $6.5 million offering

Another tech company, Remote Dynamics, Inc., announced its plans Friday to jump into the private placement market with a $6.5 million offering of series B convertible preferred stock.

The preferreds are convertible into common shares at $1.55 each.

The deal also comes with warrants for 2 million shares at $1.75 each for five years.

Remote Dynamics plans to use $5 million of the proceeds to redeem series A convertible preferred shares held by the same investor buying the series B preferreds.

In connection with the preferred stock offering, Remote Dynamics received a bridge loan from the same institutional investor for $1.75 million.

The note bears interest at 8% annually and is due on Sept. 30, 2005.

The bridge note automatically exchanges into a warrant for 1,666,667 common shares, exercisable at $0.01 each for five years and a warrant for 700,00 shares, exercisable at $1.75 each for five years.

The company expects to pocket $2.5 million from the offerings.

After the offering was announced Friday morning, Remote Dynamics' stock slid $0.13, or 8.67%, to close at $1.37.

Richardson, Texas-based Remote Dynamics provides wireless telematics and global positioning systems to commercial fleets. The proceeds from the bridge loan will be used to fund the company's business plan.

SYS wraps $3.35 million offering

San Diego-based SYS Technologies, Inc. closed a private placement of stock for $3,354,989 Friday.

Institutional investors bought up 1,427,655 shares at $2.35 each.

The investors also received warrants for 428,289 shares, exercisable at $2.50 each for five years.

"Even the warrants are at a discount, so I'm wondering why they priced it that low myself," said one market source who saw the deal. "I honestly don't have any answers to that right now. But if you ask me, it looks low."

Even so, after the deal priced early Friday, SYS's stock gained $0.03 to close at $2.78.

"The private placement strengthens our balance sheet and enables us to continue executing on our agenda for growth," said Cliff Cooke, the company's president and chief executive officer, in a statement.

"Equally important to us in this financing was attracting quality institutional investors to the company. On behalf of SYS's current shareholders and management, I was to personally thank our new institutional investors for their vote of confidence."

SYS manufactures information and communications systems for the U.S. departments of Defense and Homeland Security, as well as industrial markets. The proceeds will be used for working capital and general corporate purposes.

BioDelivery raises $2.5 million

Elsewhere in the biopharmaceutical sector, which has been rife with PIPE deals this week, BioDelivery Science International, Inc. said it has secured an additional $2.5 million from a private placement with Laurus Master Fund, Ltd.

Laurus bought a convertible note that bears interest at Prime plus 200 basis points, matures in three years and is convertible into common stock at $3.10 per share.

The note was sold as an option from BioDelivery's Feb. 23 offering of another $2.5 million note to Laurus, sold under the same terms.

Laurus also received warrants for up to 483,871 shares, exercisable at $3.88 each.

"We are pleased to continue our productive relationship with Laurus," said the company's president and chief operating officer Mark Sirgo in a statement released Friday. "These financing have allowed us to maintain positive momentum on our stated corporate objectives, including moving our Bema Fentanyl formulation toward phase III trials and our Bioral Amophotericin B and Bema Long-Acting Analgesic formulations to [Investigation New Drug] filings by yearend."

Based in Morrisville, N.C., BioDelivery Sciences is a specialty biopharmaceutical company focused on drug-delivery technologies to develop and commercialize therapeutics, nutraceuticals and micronutrients. The proceeds will be used for research, development and commercialization. The remainder will be used for working capital.

The company's stock closed unchanged at $2.86 on Friday.

Terax Energy's stock slides

A day after announcing its plans to raise up to $10 million in a private placement, Terax Energy, Inc.'s stock took a dip Friday.

The company's stock lost $0.15, or 3.23%, to close at $4.50.

After the deal was first announced Thursday morning, the company's stock gained 100%, or $4.65, to close at $4.65. The company's stock had been at $0.00 since a stock split from December 2004.

The offering includes units sold at $10 each.

Based in Dallas, Terax is an oil and natural gas exploration company.

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