Interpharm secures $10 million from PIPE; Nutrition 21 raises $10 million from stock sales

By Sheri Kasprzak

New York, May 19 - Stocks rebounded and activity in the private placement market picked up Friday to round out a week that was plagued by light PIPE volume and a sluggish stock market.

"It's all about where stocks are [trading]," said one sellside market source when asked about volume gaining steam as the week wound down. "I imagine early next week, we'll see a few more things. I don't think it will be this huge influx of things, but some stuff here and there. I'd say more stuff in tech and biotech."

The Dow Jones Industrial Average edged up 15.77 to end the session at 11,144.06 after sliding 214.28 on Wednesday and giving up another 77.32 on Thursday.

The Nasdaq composite index advanced by 13.56 to close at 2,193.88, and the Standard & Poor's 500 composite index climbed 5.22 to end at 1,267.03.

Looking to specific offerings Friday, Interpharm Holdings, Inc. is preparing to close a $10 million private placement of preferred stock.

Tullis-Dickerson Capital Focus III, LP bought 10,000 shares of the 8.25% preferreds. The preferreds are convertible any time after March 31, 2007 into a total of 6.5 million common shares. The investor received warrants for 2,296,889 shares, exercisable at $1.628 each for five years.

First Albany Capital was the placement agent.

Interpharm stock dipped 1.52%, or 2 cents, to close at $1.30 (Amex: IPA). The company's stock fell 3 cents on Thursday to close at $1.32.

Interpharm chief financial officer George Aronson did not return requests for comment on the offering by press time Friday.

"Securing this $10 million capital funding is the final component of our planned financing to fund our expansion plan," said Cameron Reid, Interpharm's chief executive officer, in a news release. "Tullis-Dickerson took the time to understand our business and our plan and recognized the value in Interpharm and the quality of the Interpharm team. Tullis-Dickerson was the obvious choice for a long-term investment partner."

"With this financing, Interpharm is very well-positioned to execute their business plan to expand their generic business," said Rick Miller, a general partner of Tullis-Dickerson, in the statement. "We are exciting to be working with the outstanding management team to create additional shareholder value."

Interpharm recently reported a net loss of $1.50 million for the quarter ended March 31, compared with a net loss of $634,000 for the same quarter of 2005.

Based in Hauppauge, N.Y., Interpharm produces generic prescription and over-the-counter drugs.

Nutrition 21's PIPE

In other offerings, Nutrition 21, Inc. settled two PIPEs totaling $10 million.

The settlement of the two deals was announced early Friday afternoon, and the stock ended the day up 8.29%, or 17 cents, at $2.22 (Nasdaq: NXXI).

In the two placements, the company issued a total of 5,555,556 shares at $1.80 each to a group of investors that included Fort Mason Capital LLC and BETA. The investors received warrants for 2,222,222 shares, exercisable at $2.20 each for five years.

C.E. Unterberg Towbin, LLC was the placement agent.

"The quality of investors in these private placements reflects the confidence we share in our business strategy, as well as the market potential of our products," said Paul Intlekofer, Nutrition 21's chief executive officer, in a news release.

"As a health care-focused investment firm, the basis of our interest in Nutrition 21 is the strength of its proprietary science and its market potential," said BETA chief executive Mitchell Blutt in the release.

The proceeds will be used for marketing and advertising of Chromax and Diachrome, the company's two chromium picolinate-based products.

Nutrition 21, based in Purchase, N.Y., develops nutritional supplements.

Gold prices sink

Despite record highs earlier this year, gold prices dove by $29.00 on Friday to end the day at $651 per ounce.

"It'll take a day or two to really impact stocks," said one Vancouver, B.C.-based market source. "Still it doesn't look good [for new PIPEs]."

Even so, Consolidated Thompson-Lundmark Gold Mines Ltd. was rather optimistic and priced a C$35,062,500 offering of special warrants.

The deal includes 12.75 million special warrants at C$2.75 each. The special warrants are exchangeable on a one-for-one basis common shares once a prospectus covering the underlying shares is declared effective.

A syndicate of underwriters led by Orion Securities Inc. has a greenshoe for up to 1,825,000 additional special warrants.

The placement is expected to wrap up on June 9.

The stock gained 5 cents to close at C$2.85 (TSX Venture: CLM).

Proceeds will be used for development on the company's Bloom Lake iron ore deposit in Quebec as well as for general corporate purposes.

Toronto-based Consolidated is a gold exploration company.

Elsewhere in Canadian PIPEs, Saskatchewan Wheat Pool Inc. concluded an C$8 million private placement of stock with Mitsui & Co.

The Japanese investor purchased 1,046,627 shares at C$7.6436 each.

The proceeds from the deal will be used for general corporate purposes.

The company's stock advanced by 2.23%, or 17 cents, to close at C$7.80 Friday (Toronto: SWP).

Based in Regina, Sask., Saskatchewan Wheat Pool markets grain-handling and other agricultural products.

Crosstex stock rebounds

After announcing a $360 million private placement earlier this week, Crosstex Energy, LP's stock climbed back up on Friday.

The stock gained 25 cents, or 0.72%, to close at $34.82 (Nasdaq: XTEX) after losing 4 cents, or 0.12%, to end at $34.57 Thursday.

On Wednesday, when the deal was announced, the company's stock gave up 3.46%, or $1.24, to end at $34.61.

In the placement, Crosstex intends to sell series C subordinated units at $28.06 each. The units are exchangeable for common units after Feb. 16, 2008. The price per series C unit is a 21.7% discount to the company's $35.85 closing stock price on Tuesday.

Also, Crosstex Energy, Inc., which intends to buy $180 million of the placement, advanced for the second straight session after completing a $179,143,616 private placement to fund that investment.

On Friday, the stock gained $3.49, or 4.28%, to settle at $85.00 (Nasdaq: XTXI).

In the placement, the company sold shares at $70.17 each to Chieftain Capital Management, Inc.; Kayne Anderson MLP Investment Co.; Kayne Anderson Energy Total Return Fund, Inc.; LB I Group Inc., an affiliate of Lehman Brothers Inc.; and Tortoise North American Energy Corp. and shares at $76.90 each to Lubar Equity Fund, LLC.

Dallas-based Crosstex Energy, LP is a midstream natural gas company. Crosstex Energy, Inc., also based in Dallas, processes and refines natural gas.

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