The PIPEs Report - July 1, 2006

Widespread Speculation, Political Maneuvering Follow Appeals Court Ruling

The U.S. Court of Appeals for the District of Columbia’s decision that essentially gutted the Securities and Exchange Commission’s hedge fund registration rule has cast hedge funds into limbo: Immediately after the opinion, fund attorneys counseled their clients to take a wait-and-see approach. But a few days later, the court ordered to delay the ruling’s effectiveness until the SEC responds or appeals, which could ultimately prolong the uncertainty. Full Story

Some familiar faces from the naked shorting cast of characters gathered on Capitol Hill on June 28 to appear before the Senate Judiciary Committee for a hearing intriguingly entitled “Hedge Funds and Independent Analysts: How Independent are Their Relationships?”

Most Active Issuers Suffer Significant Loss of Value

The lifecycle of a small company could be compared to that of a child. In its infancy, a company requires constant attention from its parents, the company founders. Their doting and fussing over the infant ushers it into the next stage of life, one of rapid growth. This stage of life, equivalent to the teenage years, is the in-between age, where the ability to exist on one’s own lies right around the corner yet is still not quite here. Teenagers tend to be expensive. Cars, college, dates…it all adds up in a hurry. By the time a kid becomes an adult, the sum of the expenses is unreal.
Companies can be quite similar, where financing new plants, inventory, product development or receivables can require significant capital. And, just like the friend from high school who never grew up, some companies can’t seem to get over the hump to becoming successful, stand alone, profitable enterprises. These companies require a continual cash inflow and, quite often, that comes in the form of PIPE financings. Some companies return to the PIPE market time and time again, what we call serial PIPE issuers. And on the whole their performance in the stock market, like that of an irresponsible post-adolescent’s in life, is abysmal. Full Story

• FBR Receives Private Equity Infusion
• Omicron Loses Trademark Suit
• Ares Backs Debt Reduction at WCA
• Orthovita Receives PMA for VITAGEL
• Bluefly Sees the Green
• NicOx in Strategic Deal with Pfizer
• Vitalstream Approved for Nasdaq Listing
• WorldGate Inks Deal With BT
• Grace Brothers, Highbridge Lead $6M to Finance Hungarian Shell Merger
• Sunterra CEO Placed on Leave
• A-List Syndicate Raises $7.3M for Ironclad IPO
• Pawn Shop Chain Consigns $20M for Acquisitions
• Water Bottler Taps Market Amid SEC Inquiry, Shake Up
• Whalehaven, Bushido Lead $4M APO
• Sterile Glove Maker Fingered for Delisting Raises $3M
• Aradigm Receives Delisting Notice
• Newport Secures $1.5M
• Galaxy Goes Offshore for $2.5M
• Wealth Minerals Spikes on Financing
• Hirings & Firings