Oscient Pharmaceuticals increases new 3.5% convertibles offering

By Jennifer Chiou

New York, April 18 - Oscient Pharmaceuticals Corp. said it increased the amount of its offering of new 3.5% convertible senior notes due 2011 to $50 million from $30 million.

On March 29, the company began offers to exchange its $152.75 million of 3.5% senior convertible notes due 2011 and $22.31 million of 5% convertible promissory notes due 2009 for up to $185.6 million of the new 3.5% convertibles.

Oscient said it anticipates that the new 3.5% convertibles will be issued at between 72.5% and 77.5% of par.

For each $1,000 principal amount of outstanding 3.5% convertibles exchanged, noteholders will receive $1,000 principal amount of new 3.5% convertibles plus accrued interest.

For each $1,000 principal amount of 5% convertible promissory notes exchanged, noteholders will receive $1,300 principal amount of new 3.5% convertible notes.

The offers will expire at 11:59 p.m. ET on April 25. The company announced its plan to hold the offers on March 15.

As already reported, the new 3.5% convertible notes will be convertible into shares of Oscient common stock at a rate of 74.0741 shares per $1,000 principal amount, compared with 18.8196 shares per $1,000 principal amount of outstanding 3.5% convertibles and 18.8202 shares per $1,000 principal amount of 5% convertible promissory notes.

In addition, the company will have the right to automatically convert new notes if the closing price of its shares has exceeded 130% of the conversion price for at least 20 trading days during any consecutive 30-day trading period, according to a previous S-4 filing with the Securities and Exchange Commission.

If the notes are converted by the company, noteholders will receive an additional amount in cash or shares equal to the interest that would have accrued on the notes through May 10, 2010.

In comparison, the outstanding 3.5% convertibles have no automatic conversion provision and the 5% convertible promissory notes may be automatically converted if the average of the closing sale prices for any 15 consecutive trading days is greater than 150% of the conversion price.

Oscient Pharmaceuticals noted it believes the exchange offer and new note offering are important components of its plan to recalibrate its capital structure to better execute its business strategy.

Piper Jaffray & Co. (415 984-5141) is dealer manager for the exchange offers and placement agent for the new notes offering, and Georgeson Inc. (888 549-6633) is information agent.

Oscient Pharmaceuticals is a biopharmaceutical company based in Waltham, Mass.

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