Scottish Re gears up to close $600 million offering; Biosensors secures $15 million from convertibles deal

By Sheri Kasprzak

New York, Nov. 27 - Even though stocks sank to their lowest levels in four months, PIPE issuance got off to an ambitious start Monday following the Thanksgiving holiday.

One sellsider based in New York said the volume can be attributed to issuers eager to get private placement offerings on their books before the year ends.

"There tends to be a rush near the end [of the year]," he said. "Stocks [on Monday] may knock the wind out for a day or so this week but I don't think it's going to put much of a damper on things."

In terms of what is being priced, the sellsider said there does not seem to be much consistency in sectors.

"I don't see one doing more than another really," he added. "It's kind of all over the map."

In the broader market, the Dow Jones Industrial Average gave up 158.46 to close at 12,121.71 and the Nasdaq composite index fell 54.34 to end at 2,405.92. The Standard & Poor's 500 composite index dipped by 19.05 to settle at 1,381.90.

In fact, leading private placement action Monday was a life reinsurance company.

Scottish Re Group Ltd. secured $600 million from an offering of convertible preferred stock with MassMutual Capital Partners LLC and Cerberus Capital Management LP.

Each investor agreed to invest $300 million in the offering.

The investors will buy a total of 1 million convertible preferreds, which are convertible into a total of 150 million common shares at $4.00 each, a 39% discount to the company's $6.63 closing stock price on Nov. 24.

MassMututal, Cerberus now majority owners

When the deal is settled, MassMutual and Cerberus will own 68.8% of the company's outstanding common stock on a diluted basis.

The offering is set to close in the second quarter of 2007.

Even though the stock eventually gave up 11.76% on the day, the stock had made some slight gains in pre-market action. Just ahead of the opening bell, Scottish Re's stock had gained 1.06%, or 7 cents. The stock went on to lose 78 cents to settle at $5.85 (NYSE: SCT). The volume of Scottish Re shares traded Monday took off with 14,864,300 shares traded compared with an average 1,378,140.

"MassMutual and Cerberus consider Scottish Re a long-term investment," said Paul Goldean, Scottish Re's chief executive officer, in a conference call held Monday morning. "This transaction ends the financial uncertainty we've experienced since initiating strategic alternatives earlier this year."

Dean Miller, Scottish Re's chief financial officer, said the shares have a 7.25% accretion level, which will impact the preferreds in the event of a sale. The accretion level won't impact the liquidation preference of the preferreds, which do not pay annual dividends.

"In addition to the financial strength afforded by MassMutual Capital and Cerberus as majority shareholders, these firms offer Scottish Re extraordinary insurance, operational and investment expertise," said Goldean in a statement released Monday morning.

Located in Hamilton, Bermuda, Scottish Re is a life reinsurance company.

Biosensors' placement

Looking to the biotech sector, Biosensors International Group, Ltd. said it will settle a $15 million private placement of convertible notes. The investors have the option to buy up to another $15 million in principal of the notes in the deal, which is set to close Nov. 30.

The 3.95% notes, due Nov. 29, 2009, are convertible into common shares at S$1.029 each. The conversion price is an 18.27% premium to the company's S$0.87 closing stock price Nov. 24.

Investor Granite Global Ventures will receive warrants for 4,552,352 shares, exercisable at S$1.029 each through Nov. 29, 2009.

The second tranche of the offering, for at least $5 million but up to $15 million, will close within 120 days. The investor has agreed to buy another $5 million of the deal regardless of whether Biosensors can secure another $10 million in principal of the notes from other investors.

Proceeds will be used to accelerate clinical trials and new research and development programs.

"Granite Global Ventures is an established venture firm that has a successful track record in expansion-stage capital investments in the United States and Asia," said Kee Lock Chua, president of Biosensors, in a news release.

"At our stage of development, the additional capital, along with the business network of Granite Global Ventures, will enable us to pursue our plans more aggressively and root ourselves more firmly in the area of biodegradable and polymer-free drug-eluting stents."

The company's stock closed unchanged at S$0.86 Monday (Singapore: B20).

Biosensors, based in Singapore, develops medical devices used in cardiology and critical care procedures, including stents used in open-heart surgery.

BioMS raises C$20.9 million

In other biotech news Monday, BioMS Medical Corp. saw its stock fall off slightly after announcing a C$20,899,743 private placement of units.

The company issued 6,128,957 units at C$3.41 each and plans to sell another 880,000 units for another C$3,000,800 in proceeds in the coming weeks..

The units consist of one class A share and one half-share warrant. Each warrant is exercisable at C$4.00 through Nov. 23, 2010.

Versant Partners Inc. and Rodman & Renshaw, LLC were the bookrunners.

Proceeds will be used for ongoing research and development efforts, as well as for general corporate purposes.

The company's stock fell 5 cents, or 1.46%, to end at C$3.37 (Toronto: MS).

BioMS, based in Edmonton, Alta., develops and commercializes novel therapies for multiple sclerosis. Its lead technology, MBP8298, for MS is currently in phase 2/3 clinical trials in Canada and Europe.

Akesis pockets $3.51 million

Also in the biotech sector, Akesis Pharmaceuticals, Inc. closed a $3.51 million offering of 5.85 million shares.

The shares were sold at $0.60 apiece to accredited investors, including Avalon Ventures VII, LP, which bought 5 million of the shares.

The investors received warrants for 877,500 shares, exercisable at $0.60 each.

Proceeds will be used for the initiation of the clinical development of AKP-101, the company's product to lower blood glucose levels used in combination with metformin in type 2 diabetes.

"This financing gives us significant resources to prepare for our upcoming clinical trial of AKP-101," said Akesis' CEO Jay Lichter, in a statement. "We are gratified to have received the confidence and support of this group of private investors and look forward to initiating this important study."

Akesis' stock closed unchanged at $0.95 Monday (OTCBB: AKES).

San Diego-based Akesis development treatments for diabetes and metabolic disorders.

Tanganyika plans C$95.46 million deal

Moving to Canadian resources offerings, Tanganyika Oil Co. Ltd. priced a C$95.46 million private placement as oil prices rebounded to kick off the week.

Oil prices made their way back above $60 per barrel Monday, gaining $1.08 to close at $60.32 per barrel.

"There is obviously a great deal of demand because the minute oil [prices] gain a little ground, you've got stuff coming out of the woodwork and good-sized stuff like this too," said a sellsider in Vancouver, B.C. who saw the Tanganyika deal Monday morning.

"You know, given where oil has been lately and how energy stocks have been doing, I don't think they [Tanganyika] priced it too bad."

The non-brokered deal includes up to 6 million shares at C$15.91 each, a 6.4% discount to the company's C$17.00 closing stock price Nov. 24.

Proceeds will be used for the development of the company's oil and gas assets in Syria and for general corporate purposes.

On Monday, the stock dropped 50 cents, or 2.94%, to close at C$16.50 (TSX Venture: TYK).

Headquartered in Calgary, Alta., Tanganyika is an oil and natural gas exploration and production company.

Jinshan Gold to raise C$30 million

In another substantial resources offering, Jinshan Gold Mines Inc. priced a C$30 million private placement of units comprised of promissory notes and warrants.

The deal includes 30,000 units at C$1,000 each.

Each unit includes one note in principal of C$1,000 and warrants for 200 common shares.

The 12% notes are due in three years.

The warrants are exercisable at C$1.60 each for two years.

Haywood Securities Inc. is the placement agent for the deal, set to close Dec. 12.

Proceeds will be used for capital expenditures and working capital.

On Monday, the company's stock gained 11 cents, or 7.97%, to close at C$1.49 (Toronto: JIN).

Vancouver-based Jinshan is a gold exploration and development company focused on projects in Asia.

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