Savient Pharmaceuticals holders allege default on 4.75% convertibles

By Susanna Moon

Chicago, June 8 - Savient Pharmaceuticals, Inc. holders have alleged an event of default under the company's 4.75% convertible senior notes due 2018, according to an 8-K filing with the Securities and Exchange Commission.

In a June 7 letter, lawyers on behalf of the noteholders cited as triggering default the April 30 creditor derivative action complaint filed by Tang Capital Partners, LP in the Delaware Court of Chancery against the company and its current directors, which seeks appointment of a receiver for the company.

On June 8, the company responded to the letter and set forth several reasons why the Delaware action is not and cannot be a basis for an event of default or acceleration under the note indenture, according to the filing.

The company said it strenuously and in good faith disputes the occurrence of an event of default or any acceleration under the notes.

In addition, the company said it submitted a request to the Delaware Court of Chancery that the court schedule a hearing on the company's motion to dismiss the Delaware action.

Savient said it also is beginning litigation against Tang Capital Partners in the Delaware Court of Chancery seeking a declaratory judgment that an event of default has not occurred under the 4.75% convertible.

If the alleged event of default were to result in the acceleration of the notes, then following notice and a 30-day cure period, a cross-default would be triggered, which would in turn give holders of at least 25% of the notes issued the right to cause the accreted value of, and any accrued interest on, the notes to immediately become due and payable.

Morris, Nichols, Arsht & Tunnell LLP is counsel to the company, and Ropes & Gray LLP is working on behalf of some unidentified noteholders.

Savient is a pharmaceutical company located in East Brunswick, N.J.

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