Unilife investor claims trigger event when converting 250 preferreds

Company disputes event; issues additional shares despite disagreement

By Devika Patel

Knoxville, Tenn., Nov. 24 – Unilife Corp. reported that an investor that purchased its 8.5% series A redeemable convertible preferred stock in a Nov. 9 registered direct offering delivered a conversion notice for 50 preferreds on Nov. 13 and another conversion notice for 200 preferreds on Nov. 19, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

The calculation in the conversion notices assume that “Trigger Events” have occurred under the purchase agreement. The company disputes any Trigger Event has occurred and has reserved its rights and remedies, including the right to initiate an arbitration concerning this dispute.

While disputing the claims made in the conversion notices, on Nov. 23, the company issued 3,332,706 common shares to the investor, which is the number of shares that the company believes the investor would be entitled to receive if there was a trigger event, in addition to the 3,928,936 shares and $280,000 in cash that the company had already issued and paid on the assumption that no trigger event occurred.

Under the terms of the preferreds, a trigger event would increase the dividend rate by 10 percentage points per annum, change the manner in which the number of shares to be issued in a conversion is calculated and eliminate the company’s ability to redeem the preferreds or force conversion.

As previously reported, the company sold 790 seven-year preferreds at $10,000.00 per preferred with a 5% discount, which equals $9,493.67 per preferred with the discount. The preferreds are convertible into common stock at $1.00 per share, an 8.03% premium to the Nov. 6 closing share price of $4.86. The preferreds may be redeemed.

Unilife makes injectable drug-delivery systems and is based in York, Pa.

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