Capstone Turbine secures up to $54 million from direct deal; CepTor, Sensor System get equity lines

By Sheri Kasprzak

New York, Oct. 10 - With the vast majority of people celebrating the Columbus Day holiday in the United States and Thanksgiving Day in Canada, Capstone Turbine Corp. led PIPE news with word that it has reached agreements with two institutions for a $54 million direct offering.

In an unusually structured deal, Capstone plans to sell up to 17 million shares to Monarch Pointe Fund, Ltd. and Asset Managers International Ltd.

Capstone reportedly had 84,911,533 outstanding common shares as of July 21.

On each of 10 trading days following Oct. 7, the investors will buy shares of Capstone at 96% of the volume weighted average price.

The number of shares sold, according to a statement from Capstone, may be determined by dividing $10 million by the purchase price on the first trading day after Oct. 7 and by dividing $4,888,888.89 by the purchase price on each trading day thereafter during the offering period. After the initial $10 million on the first day, on any day during the offering period, Capstone may require the investors to buy shares with a total purchase price of $7.5 million.

No shares will be purchased on Oct. 13. Also, if Capstone stock drops below 90% of its average value on the previous day, no shares will be bought unless Capstone requests.

No calls made to Capstone's Chatsworth, Calif., headquarters were returned by press time Monday.

One market source who had briefly looked at the deal said he'd never seen a structure of this kind before.

"It's unique, for certain," said the source. "I generally don't look at direct [offerings], so it's hard to say just how rare it is. I would say that any time a company prices something at a discount to the VWAP over a certain period of time, they're probably doing this because their stock isn't performing that well right now. It's better for them than just selling shares at a certain discount."

In fact, after the deal was announced Monday morning, Capstone's stock plummeted 17.74%, or $0.58, to finish the day at $2.69.

For the quarter ended June 30, 2005, Capstone reported a net loss per share of $0.13, the same net loss per share reported for the corresponding quarter of 2004.

"We face potentially significant fluctuations in operating results, and the market price of our common stock is highly volatile and may change regardless of our operating performance," said the company's latest earnings report, in part.

As to the company's earnings, Capstone reported a net loss of $10,865,000 for the quarter ended June 30, 2005, slightly wider than a net loss of $10,534,000 for the same quarter of 2004.

"We had a gross loss of $3.4 million for the first quarter of fiscal [year] 2006, compared with $2.5 million for the same period last year," said the earnings report. "We expect to incur gross losses until we are able to increase our contribution margins through higher sales volumes, lower warranty and direct materials costs and reduced manufacturing costs through efforts such as outsourcing non-core functions such as design, assembly, test and installation support."

Proceeds from the offering will be used to finance long-term plans in the alternative energy marketplace.

Capstone Turbine produces low-emission microturbine systems.

Two companies get equity lines

Moving elsewhere in the PIPE market on Monday, CepTor Corp., Inc. and Sensor System Solutions, Inc. both said they have received equity lines from two different investors.

CepTor, based in Hunt Valley, Md., said Fusion Capital Fund II, LLC has agreed to buy shares under the terms of a standby equity distribution agreement for up to $20 million.

The full details of the agreement could not be determined by press time Monday.

"This flexible financing provides the company with access to capital, when needed and under our control," said William Pursley, CepTor's chief executive officer, in a statement. "We are very excited about this transaction as it assists the company in moving toward the clinic in order to execute our development plan for Myodur in Duchenne muscular dystrophy."

CepTor's stock closed unchanged at $1.70 Monday.

CepTor is a biopharmaceutical company focused on treatments for neuromuscular and neurodegenerative diseases like muscular dystrophy and multiple sclerosis.

Sensor System Solutions, Inc. said it has received a $15 million standby equity distribution agreement from Cornell Capital Partners, LP.

Cornell agreed to buy shares from Sensor over the course of two years. The details of that deal could also not be determined Monday.

Sensor also received $600,000 in convertible debentures from Cornell as part of the deal, but those terms were unavailable by Monday evening.

Proceeds will be used for business development, potential acquisitions and expansion in the United States and China.

"This agreement with Cornell Capital will allow the company to raise equity capital at appropriate times in accordance with the company's expansion plans," said Michael Young, chief executive officer of Sensor, in a statement.

"3S is introducing a number of new sensor modules that have built-in network capability. This financial arrangement will allow us to proactively capitalize on these opportunities as well as further develop our current business, review acquisition opportunities and undertake our planned expansion to the U.S.A. and China market during 2006."

"We are pleased to enter into a long-term relationship with 3S," said David Andersen, vice president at Cornell, in a statement. "The company has developed advanced sensors and online applications for remote machine and business-data management. We are impressed with the technology 3S has developed. Their sensors and software systems integrate with other emerging technologies and applications across many industries. Through its joint venture in China, 3S has positioned itself to become a major supplier to Chinese auto makers. We are looking forward to working with the company's management team and providing them with expansion capital as 3S introduces new products and grows into other markets."

Based in Irvine, Calif., Sensor System makes sensors and sensor interface electronics used in wireless communications, data appliances, automobiles and mobile devices.

Sensor's stock remained unchanged at $0.51 Monday.

La Jolla stock up 5%

After announcing a $66 million stock sale Friday, San Francisco-based pharmaceutical company La Jolla Pharmaceuticals Co.'s stock gained 5% to kick off the week and later lost almost the same amount in after-hours trading.

The company's stock ended up 5%, or $0.04, at $0.84.

In after-hours trading, the company's stock slipped $0.04, or 4.76%.

On Friday, La Jolla announced its plans to sell shares at $0.75 each in December. La Jolla's stock gained 8.11%, or $0.06, to close at $0.80 Friday.

La Jolla is focused on developing therapeutics for antibody-mediated autoimmune diseases.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.