Radient Pharmaceuticals settles default, disagreement with investors

Company issues stock, notes, preferreds and warrants to cure default

By Devika Patel

Knoxville, Tenn., June 2 - Radient Pharmaceuticals Corp. settled a disagreement with Alpha Capital Anstalt and Whalehaven Capital Fund Ltd. on June 29, according to an 8-K filed Friday with the Securities and Exchange Commission. The company also negotiated an exchange agreement with certain investors to cure a previous default.

The investors were disputing the number of warrants they received in a November 2009 registered direct offering, claiming that the effective price of the notes and shares sold in a March and April 2010 private placement was lower than the company claimed and that the effective price of the shares and notes requires that the company reset the warrant strike price.

The company settled this dispute with court approval by agreeing to issue $10.91 million in shares. The shares will be issued so that Alpha Capital receives 11,603,000 shares and Whalehaven Capital gets 8,897,000 shares. In addition, the investors will receive 8% four-month promissory notes for the monetary value of the remaining shares owed to them. The notes may be paid back in shares or cash.

The company was also in default on its convertible notes due Dec. 1, 2011, which are held by Iroquois Master Fund Ltd., Cranshire Capital, LP, Freestone Advantage Partners, LP, Bristol Investment Fund, Ltd. and Kingsbrook Opportunities Master Fund LP. On June 29, Radient agreed to settle these obligations through an exchange agreement.

The noteholders agreed to exchange their claims against the company for $4.95 million of 4% convertible notes, $6.7 million of 4% series A convertible preferred stock and a five-year warrant for 94,468,113 common shares.

The notes and preferreds initially convert to common stock at a conversion price of $0.185 per share. The warrants are initially exercisable at the same price and may only be exercised on a cashless basis.

Based in Tustin, Calif., Radient is a developer and marketer of In Vitro Diagnostic cancer tests.

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