Radient Pharmaceuticals defaults on preferreds, $4.98 million of notes

Investors seek $7.62 million in redemptions, $4.25 million in damages

By Devika Patel

Knoxville, Tenn., March 28 - Radient Pharmaceuticals Corp. has triggered a default event under its $4.98 million of 2011 notes, according to an 8-K filed Wednesday with the Securities and Exchange Commission.

As previously reported, the company said in a Feb. 23 8-K filing that it has "a severe working capital shortage" and is unable to pay its ordinary obligations. It noted in the February filing that it is seeking additional financing.

This constitutes an event of default under the notes, causing three note holders to declare a default, and also constitutes a triggering event under the company's series B and series C preferred stock, which may require the company to redeem the preferreds.

The noteholders notified the company of the default between March 26 and March 28 and exercised their right to force redemption, the company said in Wednesday's filing. These three investors hold about $3.31 million of notes, 246,358 series B preferreds and 33,092 series C preferreds.

The redemption price for these investors would require a total payment of $4.13 million on the notes and $3.49 million on the preferreds.

The company noted that, due to its lack of working capital, it will be unable to pay the redemption prices.

If it is unable to pay the balance by April 2, Radient noted in the filing, it will be required to pay late charges on the notes of 24% per year until the redemption price is fully paid. On the preferreds, the company will have to pay 2% interest each month for each unredeemed preferred until the redemption price is paid in full.

The three investors also seek $4.25 million in damages due to "breaches of fiduciary duties of care, loyalty, good faith and disclosure, self dealing and waste and spoliation of corporate assets," the company reported in the filing.

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

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