The PIPEs Report - October 1, 2006

Hidden Value in Options Used to Boost, Smooth Returns

The evolution of the PIPEs marketplace has brought forth many changes. Of primary significance is the style shift of the end buyers of PIPE issuances. PIPE investors are now more fundamentally focused, having moved away from the formerly dominant arbitrage strategies. Full Story

Appeals Court Dismisses Short-Swing Trading Case

The U.S. Court of Appeals for the Third Circuit in mid-September dismissed a three-year-old shareholder lawsuit against XM Satellite Radio and a handful of funds affiliated with Madison Dearborn Partners, rejecting the claim that the triggering of anti-dilution remedies in PIPE deals should be considered a purchase of securities. The court’s action upheld the U.S. District Court in Delaware’s dismissal of the case, Morrision v. Madison Dearborn Partners, late last year, providing further clarity to Section 16(b) under the Securities Exchange Act of 1934. The rule essentially requires insiders—including owners of 10% or more of a company—to disgorge profits realized from “any purchase and sale, or any sale and purchase, of any security of a company” within a six-month time period. Full Story

Boulder Specialty’s Deal is One of Largest by a Blank Check Company

Over a dozen institutional investors agreed to put almost a quarter of a billion dollars into two PIPEs with specified purpose acquisition company (SPAC) Boulder Specialty Brands to finance its acquisition of GFA Brands, the maker of “Smart Balance” and “Earth Balance” brand health foods. Full Story

• Fund Manager Faces Criminal Charges in Compudyne Case
• Butler Accused in CKX Insider Trading Case
• Genta Shares Rise on Data, Retreat on Issuance
• BearingPoint in Default
• Sovereign Bancorp Expects to be Acquired
• Merck Makes Strategic Investment in FoxHollow
• Regency Energy Places $60M in Convertible Stock
• Pegasus Wireless Cuts PIPE, Voluntarily Delists
• Willbros Manager Pleads Guilty to Bribery Charges
• SEC Fines Former Sipex CEO Maghribi
• Tenth PIPE for VCampus
• Renova Raising Stake in Moscow CableCom
• Sirva Serves $75M in Notes to MLF, ValueAct
• Bulge Banks Launch Block Trading Network
• Third Point Leans on Nabi Chief
• Hirings & Firings