Radient defaults on convertible notes, looks for 'amicable solution'

Company misses May 1 payment, leading noteholders to demand repayment

By Angela McDaniels

Tacoma, Wash., May 11 - Radient Pharmaceuticals Corp. failed to buy back a portion of its convertible notes on May 1. This resulted in an event of default, and the noteholders have demanded repayment, according to an 8-K filing with the Securities and Exchange Commission.

"In furtherance of our efforts to reserve cash for our operations rather than the repayment of debt, we are reaching out to the noteholders to reach an amicable solution with them regarding the default and payment owed," the company said in the SEC filing.

The company issued $8.43 million principal amount of the convertibles in a placement on Jan. 31. It is required to buy back a portion of the convertibles on the first day of each month in cash or shares of common stock. As of May 1, the outstanding principal amount of the notes is $6.75 million. The total installment amount due on May 1 was $843,750.

Under the note terms, the company is required to maintain a cash balance of at least $2.25 million of unrestricted cash at all times. The company said the May 1 installment would have caused its cash balance to fall below $2.25 million.

Due to the default, the noteholders can force the company to redeem the notes in cash, and all of the noteholders have given redemption notices. As a result, it is required to pay $8.62 million by May 12. This includes a late charge equal to interest on the May installment at the rate of 24% per year from May 1 through May 10. This interest will accrue until the notes are repaid.

Additionally, the company is required to pay a registration delay payment of 1.5% of the total purchase price each month until the registration statement registering the shares underlying the notes and warrants issued in the placement is declared effective.

Radient is a Tustin, Calif., pharmaceutical company.

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