Accentia seeking to restructure debt, obtain additional financing

Washington, Dec. 29 - Accentia Biopharmaceuticals, Inc. said Thursday it is trying to restructure its debt to increase the availability of funds near term.

The company said it also intends to seek additional financing through one or more public or private equity offerings, additional debt financings, corporate collaborations or licensing transactions.

As of Sept. 30, the largest amounts Accentia owed were:

• $3.9 million to McKesson under a convertible term loan due on settlement of its initial public offering. Interest is at 10% plus a 5% default rate;

• $2.095 million due to McKesson on a revolving line of credit. Interest is at 10% plus a 5% default rate. Since Sept. 30 the debt to McKesson has been paid down to $0.8 million;

• $4.44 million in a 7% note owed to former management of Biovest. Interest due at maturity;

• $8.19 million owed on a convertible term note due April 2008 with Laurus Master Fund, Ltd. Interest is at prime plus 400 basis points;

• $ 6.59 million owed on a note to Harbinger Mezzanine Partners, LP due June 2006. Interest is at 13.5%;

Existing capital resources and cash flow from operations along with borrowing availability under lines of credit are expected to be enough to fund the company's operations and development activities into the third quarter of fiscal 2006, Accentia said in its 10-K filing with the Securities and Exchange Commission for fiscal 2005, ended Sept. 30, 2005.

But the extra financing would generate more funds near term.

If Accentia cannot raise more capital, it may consider additional strategic financing options, including sales of assets or business units that are not essential to the ongoing development or future commercialization of its SinuNase product. It may also delay, reduce the scope of, or eliminate one or more of its research or development programs or curtail some of its commercialization efforts.

Accentia's Biovest subsidiary is also seeking financing through public or private equity offerings, debt financings, corporate collaborations or licensing transactions.

Until then, it will fund Biovest through intercompany demand loans, with $5.5 million outstanding as of Dec. 20.

Once Biovest raises funds, Accentia does not expect to continue to finance its operations, according to the 10-K.

Accentia is a Tampa. Fla.-based biopharmaceutical company.

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