Resverlogix amends $25 million of convertible debentures

By Laura Lutz

Des Moines, Sept. 4 - Resverlogix Corp. modified the terms of $25 million of convertible debentures that were sold in a private placement on June 7, lowering the conversion price and the interest rate in exchange for the removal of an interest-to-maturity clause.

The conversion price was reduced to C$8.76 from C$17.50.

The interest rate was changed to a fixed rate of 12% per year from the current adjusted rate of 14% per year. When the notes were issued, the interest rate was initially set at 8% per year. Under the original terms of the notes, it was adjusted based on the trading price of the company's shares.

The amendments eliminated a requirement that the company pay interest to maturity on the notes if they were converted below the conversion price that was then in effect.

The debenture holders now have a once-monthly put option for 5% of the principal amount in cash, shares or a combination of both. The holders also have a cumulative put option, if monthly put options are not exercised, in excess of the 5% put option, but the excess will be paid in shares unless otherwise agreed.

Resverlogix now has the option to force conversion of the entire debt at C$18.00 after June 30, 2008 if some trading conditions are met.

The exercise price on warrants for about 530,000 shares that were issued in the original placement has been lowered to C$10.25 from C$20.63. The company also issued warrants for an additional 529,000 shares were issued.

Most of the changes do not apply to convertible notes issued in a January private placement. The company did remove a requirement to pay cash on any interest-to-maturity conditions on the January notes if trading volume requirements were not met.

The exercise price of the warrants issued in the January placement was also lowered to C$10.25 from C$15.09.

As of Tuesday, $7.3 million principal amount of the January notes remains outstanding out of $17 million originally issued.

Based in Calgary, Alta., Resverlogix is a biotechnology company focused on therapies for cardiovascular disease. The company's stock closed at C$17.20 on June 5; on Aug. 31, it closed at C$11.85 (Toronto: RVX).

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