The PIPEs Report - November 4, 2008

Paralyzed credit markets and seismic volatility in equities took their toll on small PIPE issuers in the opening weeks of the fourth quarter, leading many to default on debt or to radically restructure.

Already this year, many companies with market caps of $100 million or less have had to accept expensive financing, such as notes with coupons of 14% or more and convertible preferred stock with dividends of at least 10%.

Managers Make Difficult Pitch for Longer Lockups

With rapid attrition in the hedge fund world, money managers who invest in PIPEs are trying to move toward longer-term capital structures wherever possible. But it's not easy to convince spooked investors, especially funds of funds, to agree to keep their money put in smaller vehicles investing in smaller public companies.

Investment bankers have increasingly been arranging private placements that resemble registered direct placements, but where the banker acts as an underwriter, giving companies quicker access to the capital they raise and appealing to a wider range of investors.

• Nasdaq Suspends Minimum Listing Requirements
• Former Bonanza Analyst Settles Insider Trading Charges
• Jayhawk Eyes China Following Fund Closing
• Nat City PIPE Investors Bailed Out by PNC Purchase
• Mitsubishi to Raise $10.6B Following PIPE into Morgan Stanley
• Issuers Favor New Short-Selling Rules, Study Says
• Hirings & Firings