Emisphere defaults on $31.1 million notes held by MHR Management

Company hasn't paid Sept. 26 principal, interest payments due on notes

By Devika Patel

Knoxville, Tenn., Sept. 26 - Emisphere Technologies Inc. said that as of Sept. 27, it will be in default under its 11% senior secured convertible notes and certain non-interest-bearing promissory notes. Both notes are held by MHR Fund Management LLC.

The defaults stemmed from the company not paying about $30.5 million of principal and interest due on the convertibles and $600,000 of principal due on the interest-bearing notes. Both payments were due Wednesday, the company said in a press release.

The convertibles are secured by substantially all of the company's assets, and MHR may foreclose on these assets due to the default. The investor has not yet demanded payment, but MHR told the company it is prepared to continue discussions concerning the notes.

Tarrytown, N.Y.-based Emisphere is a biopharmaceutical company.

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