The PIPEs Report - October 16, 2007

PIPE Market Shrugs Off Turmoil

The credit market unrest that sparked wild stock market swings this summer threatened to frost a red hot PIPE market in a time of year already known for sluggish deal flow. But the events did little to slow the PIPE market’s advance toward an historic year of raising capital and may have even accelerated private placements. Full Story

PIPE issuers may run afoul of compensation guidelines if they provide additional commission to placement agents on financing received after completion of an offering. Such tail fees, or “tails,” are common compensation structures in both unregistered PIPE issues and registered direct (shelf sale) issues of securities. Agents may receive tails, warrants, rights of first refusal on future public issues or other compensation in addition to cash. Full Story

Venture capital firms have recently embraced private investments in public equities, departing significantly from their usual pattern of taking stakes in privately held enterprises before or as they go public. If a private company in a venture capital portfolio falters, venture investors with management talent can jump in and seize the reins if they deem it necessary. But in public company investments, it’s usually more difficult for venture capital investors to participate actively in management or business strategy development. Full Story

• Keating Bullish on China with $100M PIPE Fund
• Primarius Clashes with Jayhawk in Vitriolic Lawsuit
• SEC Suspends China PIPE Issuer, Suspicions Swirl
• Drink Company’s Stock Sluices Downhill After PIPE
• PIPE-Issuing Canadian Mine Co. Sells for $1.52B
• Valens Profits from Subprime Jitters
• Sandell Fined $8M for Post-Hurricane Shorting
• Forest Gate Claims Gusher Just When Cash Squeezed
• Hirings & Firings