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From:

"Dan Primack"

Name:

Dan Primack

Email Address:

Dan_Primack@fortune.chtah.com

Subject:

Term Sheet -- Wednesday, October 20

Date:

20-10-2010 14:00:24
Message

Fortune Finance Street Sweep Term Sheet Economics Tech Wall Street Washington

The Term Sheet by Dan Primack

Wednesday -- October 20, 2010
Email Dan | Follow Dan on Twitter | Subscribe

Random Ramblings
Shares of coal producer Massey Energy shot higher yesterday, on a WSJ report that the company could be
on the block. If the company sounds particularly familiar, it may be because Massey operated the West
Virginia mine where 29 workers died this past May.
Any potential buyer obviously needs to prepare for a PR headache, particularly if it leaves in place a
management team that collects safety violations as if they were McDonalds Monopoly pieces. It also would
have to figure out how to deal with potential liabilities and legal costs. Not from the miners families that
should be covered by existing indemnity insurance but from potential actions by U.S. regulators and/or
the FBI. No idea how you price in that sort of unknown or if you just assume that public shareholders
have done that for you.
*** Last month, I mentioned that veteran Silicon Valley investor David Siminoff had launched a hedge
fund called Thompson Peak Capital. In general, its buying stakes in tech/media/telecom companies with
market caps of at least $100 million.
According to fund documents, Thompson Peaks debut fund was up 9.3% on the year, after gaining 2.2% in
the third quarter.
*** Interesting data from Buyouts newsletter, which recently surveyed buyout and mezzanine firms about

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their 2011 hiring plans. Looks like 24% of surveyed firms plan to add at least one new employee next year,
while 72% plan to maintain existing staffing levels.
*** Yesterday I blogged a bit more about the prospective Harrahs IPO, which is designed to raise
upwards of $575 million.
Whats so remarkable about the Harrahs piece is that there is no mention of using proceeds to pay down
existing debt. Such use of IPO cash is standard operating procedure among big companies once taken
private by LBO firms, and Harrahs has a particularly large debt load. Just look at recent IPO filings for
HCA, Toys r Us, etc
*** Thanks for all your emails on yesterdays column. I plan to post a bunch of them in the next feedback
column. Suffice to say, most of you liked my advice until that lying part
*** Speaking of emails, it seems there is some confusion about mine. You can just hit reply to these
missives (I get them), or email me directly at dan_primack@fortune.com.

5 things you should read @Fortune.com

Pre-Marketing, including pharma's biggest flops, Q&A with HuffPo head, the female-run hedge
fund that wasn't, Paul Graham on startups, Arthur Levitt blasts Dodd-Frank and why TARP was a
better investment than U.S. Treasuries.
40 Under 40: Blackstone Group's young guns

Dan Primack: Harrah's keeps gambling with its upcoming IPO

David Kaplan on David Boies, America's number one hired gun

Shelley DuBois: Intel missed the iPad revolution but says it's not worried. Should it be?

The Big Deal

Siluria Technologies, a San Francisco-based developer of a direct chemical process for manufacturing
chemicals, materials and fuels from natural gas, has raised $13.3 million in Series A funding. Backers
include Alloy Ventures, ARCH Venture Partners, Kleiner Perkins Caufield & Byers, Altitude Life Science
Ventures, Lux Capital and Presidio Ventures (unit of Sumitomo Corp.).
This is a big deal, because Siluria is working on a process that could utterly tranform the production of
plastics, solvents and other materials that use ethlyne gas as one of their basic building blocks. Ethylene
traditionally has been produced via a process called steam-cracking, which is expensive and requires the
use of major amount of crude oil. Siluria, however, believes it can create ethylene cheaper and faster, via
the creation of a virus that can synthesize ethylene from natural gas.

VC Deals

Pearl Therapeutics Inc., a Redwood City, Calif.-based drug developer focused on chronic respiratory
diseases, has raised $69 million in Series C funding. Vatera Healthcare Partners led the round, and was
joined by return backers Clarus Ventures, New Leaf Venture Partners and 5AM Ventures. The company
now has raised $102.5 million in total VC funding. www.pearltherapeutics.com
1366 Technologies, a Lexington, Mass.-based maker of solar energy cells, has raised $20 million in
Series B funding. Hanwha Chemical and Ventizz Capital were joined by return backers North Bridge
Venture Partners and Polaris Venture Partners. www.1366tech.com

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Travel Ad Network, a New York-based online travel media company, has raised $15 million in Series C
funding. StarVest Partners led the round, and was joined by return backers Rho Ventures and Village
Ventures. GCA Savvian Advisors advised Travel Ad Network, which now has raised $31 million in total VC
funding. www.traveladnetwork.com
SiOnyx, a Beverly, Mass.-based developer of high-performance photonics, has raised $12.5 million in
Series B funding. Crosslink Capital and Vulcan Capital and Coherent Inc. were joined by return backers
Harris & Harris Group and Polaris Venture Partners. www.sionyx.com
Revolution Analytics, a Palo Alto, Calif.-based provider of software and support for the open-source R
statistics language, has raised $8.62 million in new VC funding, according to a regulatory filing. The
company previously raised $9 million from Intel Capital and Nortyh Bridge Venture Partners.
www.revolutionanalytics.com
StockTwits, a New York-based financial media company, has raised more than $4 million in Series C
funding from return backers True Ventures and Foundry Group. www.stocktwits.com
CommProve, a Dublin, Ireland.-based provider of network monitoring and business solutions for mobile
networks, has raised $4 million in new VC funding. Return backers include TLcom Capital, TVM Capital
and Endeavour Vision. www.commprove.com
EcoSmart Technologies, an Alpharetta, Ga.-based maker of pesticides derived from natural plant oils,
has raised $2 million in new VC funding from Greenmont Capital Partners. The firm also secured an
additional $2 million under an existing credit facility with Western Technology Investment.
www.ecosmart.com
Honestly.com, an online service for building, managing and researching professional reputation, has
raised $1.2 million in first-round funding. Backers include Charles River Ventures, First Round Capital and
SV Angel. www.honestly.com

Private Equity Deals

AMR Corp., the parent company of American Airlines, has hired Evercore Partners and Bain & Co. to
explore options for regional unit American Eagle, according to Bloomberg. The report suggests that a
spinoff to AMR shareholders is the most likely move, but that a sale remains possible.
Management Health Solutions, a Fairfield, Conn.-based provider of supply chain software for hospitals
and healthcare systems, has acquired Hospital Inventories Specialists, a provider of inventory
management solutions and analytical services. No financial terms were disclosed. MHS is a portfolio
company of private equity firm Enhanced Equity Management. www.mhsinc.com
PPR SA is exploring staple financing options to support a sale of French furniture retailer Conforma,
according to Bloomberg. A leveraged buyout of Conforma could be valued at around 1.5 billion.
www.conformadesign.com
Sea Island Co., the bankrupt operator of Georgias Sea Island resort, has been acquired by Anschutz
Corp., Avenue Capital, Oaktree Capital Management and Starwood Capital Group. The deal was valued at
$212.4 million. www.seaisland.com

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Stripes Group has acquired a majority position in Voyetra Turtle Beach Inc., an Elmsford, N.Y.based
provider of stereo video gaming headsets. No financial terms were disclosed.
Vodafone Group is planning to put its 25% stake in Poland's Polkomtel on the block, in a deal that could
be worth around $5.6 billion, according to Reuters. Goldman Sachs is expected to management the
process, which would receive significant private equity interest. www.vodafone.com

PE-backed IPOs
NetSpend Holdings, an Austin, Texas-based provider of prepaid reloadable debit cards in the U.S., raised
around $203.5 million in its IPO. The company priced 18.5 million shares at $11 per share ($10-$12 range),
and closed its first day of trading up 18% to $13 per share. Sachs and BoA Merrill Lynch served as co-lead
underwriters on the IPO. NetSpend was acquired in 2004 by Oak Investment Partners (46.5% pre-IPO
stake). Other shareholders include JLL Partners (32.2%), based on NetSpend's 2008 acquisition of JLL
portfolio company Skylight Financial. www.netspend.com
SinoTech Energy, a Beijing-based provider of enhanced oil recovery, or EOR, services in China, has set
its IPO terms to around 9.74 million American depository shares being offered at between $7.50 and $9.50
per share. It plans to trade on the Nasdaq under ticker symbol CTE, with Citi, UBS and Deutsche Bank
serving as co-lead underwriters. Shareholders include Deutsche Bank and Sequoia Capital China.

Exits
Harbour Group has agreed to sell Lincoln Holdings Enterprises Inc., a St. Louisbased provider of
lubrication systems and equipment, to SKF of Sweden. The deal is valued at $1 billion in cash.
www.lincolnindustrial.com
Neophasis Inc., a Cambridge, Mass.-based provider of risk, governance and compliance products, has
acquired the assets of Texert Inc., a Dallas-based provider of enterprise risk management solutions. No
financial terms were disclosed. Texert had raised VC funding from New Venture Partners.
www.neophasis.com

Other Deals
CollabNet, a Brisbane, Calif.-based developer of cloud-based software lifecycle management tools, has
acquired Codesion Inc., a provider of an enterprise-grade Subdivision hosting platform. No financial terms
were disclosed. CollabNet has raised around $67 million in VC funding, including from Benchmark Capital
and Norwest Venture Partners. www.collab.net
eMinor (aka ReverbNation), a Durham, N.C.-based provider of software tools and services for independent
musicians, has acquired Sound Around, a developer of custom mobile applications for musicians. No
financial terms were disclosed. eMinor has raised over $2 million in VC funding from Novak Biddle Venture
Partners and Southern Capitol Ventures. www.reverbnation.com
GAIN Capital Holdings, a provider of FX and CFD online trading services has agreed to acquire the FX
business of Capital Market Services LLC. No financial terms were disclosed. GAIN Capital backers
include 3i Group, VantagePoint Venture Partners, Tudor Ventures, Edison Venture Fund and Cross Atlantic
Capital Partners. www.gaincapital.com
LivingSocial, a Washington, D.C.-based social discovery and cataloging network, has acquired Urban

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Escapes, a provider of in-city adventures and events. No financial terms were disclosed. LivingSocial has
raised $30 million in VC funding from Grotech Ventures, U.S. Venture Partners and Steve Cases
Revolution LLC. www.livingsocial.com
MarkMonitor, a San Francisco-based brand protection company, has acquired anti-piracy company
DtecNet Software. No financial terms were disclosed. MarkMonitor has raised $12 million in VC funding
from Cargill Ventures, Focus Ventures, Foundation Capital and Institutional Venture Partners.
www.markmonitor.com
Pfizer Inc. has agreed to acquire a 40% stake in Brazilian generic drugmaker Laboratorio Teuto
Brasileiro. The deal includes a $240 million upfront payment, plus possible earnouts. www.pfizer.com

Bankruptcies
TerreStar Networks Inc. (Nasdaq: TSTR), a Reston, Va.-based mobile satellite network operator backed
by Harbinger Capital Partners, has filed for Chapter 11 bankruptcy protection. It is being advised on a
restructuring plan by The Blackstone Group.

Moving In, Up and On

Tarrus Richardson has left ICV Partners, a private equity firm he co-founded in 1998, according to
Private Equity Insider. www.icvcapital.com

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