Inex Pharmaceuticals gets demand to pay $24.6 million convertible debt by Wednesday

By Caroline Salls

Pittsburgh, Sept. 19 - Inex Pharmaceuticals Corp. received a default notice and demand for repayment of $24.6 million from Stark Trading and Sheperd Investments International Ltd., the majority holder of the convertible debt issued by subsidiary Inex International Holdings Ltd., according to a company news release.

No other noteholders have served a repayment notice.

Stark has asked to be repaid by Wednesday.

According to the release, the company does not believe the notes are in default and it intends to oppose any action taken by Stark.

In its demand letter, Stark said it believes the notes are in default because Inex has admitted in writing that it is unable to pay or is generally failing to pay its debts as they mature or become due and because Inex is ceasing to carry on business.

At June 30, Inex had $15.2 million in working capital and it said in the release that it was committed to ensuring this capital will be sufficient to pay all of its debts in the normal course of business well past the maturity date of the notes.

According to the release, Inex is carrying on business and intends to continue to maximize the value of its assets.

As of June 30, Inex International owed $32.7 million on promissory notes originally issued to Elan Corp. plc in April 2001, which were purchased by institutional investors from Elan in April 2004. The debt is comprised of an exchangeable note and a development note.

The notes are repayable in April 2007 at Inex's option in cash, Inex shares or a combination of cash and shares.

There is no cash interest payable during the term of the notes, according to the release.

Until maturity, the notes can be converted, at the holder's option, into Inex shares at conversion prices of $5.71 for the exchangeable notes and $5.07 for the development notes.

Since December 2004, Inex said it has held a number of unsuccessful discussions with Stark to determine if a restructuring agreement could be reached on the notes.

Inex is a Vancouver biopharmaceutical company.

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