This Week's IPOs: Asset Capital, Buckeye GP Holdings, Osiris Therapeutics, Security Capital Assurance

Includes: BPL, OSIR, SCA
by: Evelyn Rubin

IPOs on deck for this week include Asset Capital Corporation (ACCI) a commercial real-estate owner and developer in the DC area; Buckeye GP Holdings (NYSE:BGH), owner of the GP of pipeline limited partnership Buckeye Partners L.P.; Osiris Therapeutics (NASDAQ:OSIR), a developer of stem cell therapeutics; and Security Capital Assurance (SCA), a provider of credit enhancement and protection products to the public finance and structured finance markets.


Business Description (from Prospectus):

We are a self-managed real estate company focused on opportunistically acquiring, redeveloping, financing, managing and disposing of commercial real estate properties located primarily in the greater metropolitan Washington, D.C. marketplace and its surrounding areas, ranging generally from Baltimore, Maryland through Richmond, Virginia and the Hampton Roads, Virginia metropolitan statistical area. We consider this area to be our target market. We invest primarily in commercial real estate properties that we believe have the potential for a significant increase in operating cash flow from our hands-on management, leasing, engineering and capital improvement programs. We also originate, acquire and invest in various types of structured real estate investments in properties located primarily in our target market.

We expect to regularly dispose of or recapitalize properties once they reach what we believe to be their maximum near-term value and re-deploy our equity capital into other real estate investment opportunities that we believe have the potential for increased returns. In some cases, if we believe a property has the potential to increase significantly in value over the long-term, we may hold that property as a long-term investment. Our objective is to provide attractive returns to stockholders through a combination of capital appreciation, increased earnings and cash flow and dividends.

Underwriters: Friedman Billings Ramsey, Robert W. Baird, Wachovia

Offering: The company is offering 9.25 million shares at a range of $9-10 per share. Net proceeds are estimated at $67.5 million; selling shareholders are offering 1.25 million of the shares on offer.


Business Description (from Prospectus):

We own and control Buckeye GP LLC, which is the general partner of Buckeye Partners, L.P. (NYSE: BPL), a publicly traded Delaware limited partnership. Our primary cash-generating assets are our general partner interests in Buckeye, which consist of (i) general partner units, or GP units, in Buckeye, (ii) the incentive distribution rights in Buckeye, and (iii) approximate one percent general partner interests in Buckeye's subsidiary operating partnerships. The incentive distribution rights entitle us to receive incentive distributions based upon the amount of quarterly cash distributions that Buckeye pays to its limited partners. As the amount of cash distributions paid by Buckeye to its limited partners meets certain target distribution levels, we receive payments equal to an increasing percentage of such cash distributions. Buckeye's most recent quarterly cash distribution was in excess of the highest distribution level. Based upon Buckeye's quarterly distribution of $0.75 per Buckeye limited partner unit, or LP unit, we will pay an initial quarterly cash distribution of $0.205 per common unit, or $0.82 per unit on an annualized basis, to the extent we have sufficient cash from operations after establishment of cash reserves and payment of fees and expenses.

Buckeye is principally engaged in the transportation, terminalling and storage of petroleum products in the United States for major integrated oil companies, large refined products marketing companies and major-end users of petroleum products on a fee basis through facilities that Buckeye owns and operates. Buckeye owns and operates one of the largest independent petroleum products pipeline systems in the United States in terms of volumes delivered, with approximately 5,350 miles of pipeline, serving 17 states. Buckeye also operates approximately 2,100 miles of pipeline under agreements with major oil and chemical companies. Further, Buckeye owns and operates 45 active refined petroleum products terminals in Illinois, Indiana, Massachusetts, Michigan, Missouri, New York, Ohio and Pennsylvania with aggregate storage capacity of approximately 17.6 million barrels. Buckeye's pipelines service approximately 100 delivery locations, transporting petroleum products including gasoline, turbine fuel, diesel fuel, heating oil and kerosene from major supply sources to terminals and airports located within major end-use markets. These pipelines also transport other products, such as propane and butane, refinery feedstocks and blending components. Buckeye's transportation services are typically provided on a common-carrier basis under published tariffs. Buckeye's geographical diversity, connections to multiple sources of supply and extensive delivery system help create a stable business. Buckeye is an independent transportation provider that is not affiliated with any oil company or marketer of petroleum products and generally does not own the petroleum products that it transports.

Underwriters: Goldman Sachs, Citigroup, Merrill Lynch, UBS

Offering: 14.1 million shares at an offering range of $19-21 per share. The company expects net proceeds of $264.6 million. Proceeds are targeted to debt repayment, transaction expenses, and repayment to existing equity owners.


Business Description (from Prospectus):

We are a leading stem cell therapeutic company focused on developing and marketing products to treat medical conditions in the inflammatory, orthopedic and cardiovascular areas. We have one marketed product, Osteocel, and three biologic drug candidates in clinical development. Osteocel and our biologic drug candidates utilize human mesenchymal stem cells, or MSCs. We obtain MSCs for use in our biologic drug candidates from the adult bone marrow of volunteer donors. MSCs are progenitor cells that have strong anti-inflammatory properties, prevent scarring, and can regenerate and repair damaged tissue. We are a fully integrated company having developed stem cell capabilities in research and development, manufacturing, marketing and distribution.

We currently market and sell Osteocel for regenerating bone in orthopedic indications. It is the only commercially available product in the United States containing viable stem cells. Prochymal, our lead biologic drug candidate, for the treatment of inflammatory disease, is the only stem cell therapeutic for which patients are being enrolled in Phase III clinical trials and is the only stem cell therapeutic currently designated by the FDA as both an Orphan Drug and Fast Track product. Our pipeline of internally developed biologic drug candidates also includes Chondrogen, for regenerating cartilage in the knee, and Provacel, for repairing heart tissue following a heart attack.

Underwriters: Jeffries, Lazard Capital Markets, Leerink Swann

Offering:3.5 million shares at an $11-13 per share range. At mid-range, the net raise would be $37.5 million ($43.2 million if the over-allotment is exercised). The bulk of the raise is targeted at conducting clinical trials and general corporate purposes.

Financial Highlights:

As of March 31, 2006 we had an accumulated deficit of $147.7 million. We expect losses to continue for at least the next several years. Our net loss was $20.0 million for the fiscal year ended December 31, 2005 and $5.1 million for the three months ended March 31, 2006.


Business Description (from Prospectus):

We are a Bermuda-domiciled holding company whose operating subsidiaries provide credit enhancement and protection products to the public finance and structured finance markets throughout the United States and internationally. We provide credit enhancement and protection through the issuance of financial guaranty insurance policies and credit default swaps, as well as the reinsurance of financial guaranty insurance and credit default products written by other insurers. Our subsidiaries began providing financial guaranty reinsurance in 1999 and direct financial guaranty insurance in 2000. Our insurance and reinsurance subsidiaries are rated “Aaa” by Moody’s Investors Service, Inc., which we refer to as “Moody’s,” “AAA” by Standard & Poor’s, a division of the McGraw-Hill Companies, Inc., which we refer to as “S&P,” and “AAA” by Fitch, Inc., which we refer to as “Fitch.” Each of these ratings is the highest applicable rating available from that agency. Ratings are a measure of our subsidiaries’ ability to meet obligations to their policyholders and not an evaluation of SCA or an investment in SCA’s securities, including the shares of common stock offered hereby.

Underwriters: JP Morgan, Goldman Sachs, Merrill Lynch

Offering: 22.4 million shares, including 4.4 million from insiders. At a $21-23 per share range, the mid-range net raise is expected to be approximately $367 million. The majority of the raise will go towards the growth of the company's insurance and reinsurance subsidiaries.

Financial Highlights:

For the year ended December 31, 2005, we had total premiums written of $285.4 million and net premiums written of $244.9 million. Over the five-year period through December 31, 2005, our in-force book of business (meaning policies under which we, at the relevant date, have risk of loss) has increased to $81.9 billion (net of ceded reinsurance), our deferred premium revenue (premium that has been accounted for as written but has not yet been earned) has grown to over $592 million and the estimated fair value of future premiums on all in-force installment business (all future premiums to be paid on an installment basis, which cannot be accounted for as written until the installment is due in the future) has increased to $374.6 million. Our profitability has also grown over this period, with net income available to common shareholders rising from $9.3 million for fiscal 2001 to over $80.4 million in fiscal 2005 and $83.7 million on a pro forma basis for 2005. For the three months ended March 31, 2006, we had total premiums written, net premiums written, net income available to common shareholders and pro forma net income available to common shareholders of $82.2 million, $74.6 million, $16.7 million and $17.6 million, respectively. Net income available to common shareholders and pro forma net income available to common shareholders for the three months ended March 31, 2006 included $5.7 million in net realized losses on investments, which primarily resulted from a $5.0 million impairment on an investment acquired in satisfaction of a claim, and a $3.8 million net mark-to-market charge on our in-force credit default swap portfolio. In addition, net income available to common shareholders for the three months ended March 31, 2006 was net of $4.6 million in preference share dividends, which included a charge for an amendment to the terms of such shares. As a result of such amendment, dividends on the preference shares will be $1.1 million quarterly subsequent to March 31, 2006.