Sepracor to buy back stock used to settle call spread options

New York, Nov. 8 - Sepracor Inc. said it will buy back the stock it will issue to settle the last remaining call spread option series still outstanding from December 2003.

The company has the choice of settling the options with cash or stock and said it will pick stock but use net share settlement - and then reacquire the shares issued.

Sepracor's only remaining call spread options are a series of 4,919,496 options that expire in equal installments from Nov. 11 through Dec. 9.

Under the terms of the options, Sepracor will issue a number of shares equal to the amount by which the trading level of its stock on the expiration date exceeds $29.8352, with a cap on the stock price of $65, all divided by the trading level. With net share settlement, the number of shares that it will reacquire will be between zero and 2,661,432, depending on its stock price. Sepracor stock closed at $56.71 on Monday.

The options were issued alongside Sepracor's 0% series A convertible subordinated notes due 2008 and 0% series B convertible subordinated notes due 2010. From the original four series of options, just one remains.

Counterparties to the trades are Morgan Stanley & Co. Inc., Capital Ventures International and Credit Suisse First Boston.

Sepracor, a Marlborough, Mass., pharmaceutical company, will use reacquired shares for its stock plans and other purposes.

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