Nephros plans to raise $3 million through rights offering of stock

Proceeds will be used to repay $1.3 million bridge loan

By Angela McDaniels

Tacoma, Wash., Feb. 5 - Nephros, Inc. said it plans to conduct a $3 million rights offering of common stock at an anticipated offering price of $0.60 per share.

The company expects to begin the offering in March following the filing of its 10-K annual report, according to an 8-K filing with the Securities and Exchange Commission.

The anticipated offering price is 58.3% less than the $1.44 closing price of the company's common stock (OTCBB: NEPH) on Monday.

All of the company's stockholders and warrantholders will be eligible to participate in the offering on a pro rata basis based on their ownership of the company's common stock on a fully diluted basis.

Nephros expects to offer to the holders of the warrants issued at the close of the March 2011 rights offering a one-time right to exercise those warrants for $0.30 per share, discounted from $0.40 per share.

The rights offering is required under the terms of a $1.3 million six-month 12% senior secured note issued to Lambda Investors LLC on Monday. The proceeds of the rights offering will be used to repay the note.

Nephros believes the proceeds of the note will allow it to fund its operations into May.

Lambda owns 31.2% of the company's common stock, making it the largest shareholder. On a fully diluted basis, it owns 53% of the common stock.

Nephros is a medical device company that makes liquid purification ultrafilters. It is based in River Edge, N.J.

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