Cell Therapeutics offers to exchange convertibles for fewer notes with lower conversion price

New York, Nov. 19 - Cell Therapeutics, Inc. started an offer to exchange its existing $175 million 5.75% convertible subordinated notes due 2008 for a smaller amount of new notes with the same coupon but a lower conversion price and seniority in the capital structure.

The Seattle pharmaceutical company is offering $102.9 million of 5.75% convertible senior subordinated notes due 2008 for the existing notes at the rate of 0.588 new notes per existing note.

Holders will be able to convert the new notes at $10 per share compared to $34.00 for the existing convertibles. Cell Therapeutics stock closed at $7.81 Tuesday.

The new notes have a provisional call until June 21, 2004 if Cell Therapeutics stock trades above $15 for 20 out of 30 consecutive trading days.

Other than the total principal amount, the conversion price, the seniority and the provisional call the two series of convertibles are identical.

Cell Therapeutics said the exchange will reduce the principal amount of its outstanding convertible debt by up to $72.1 million and cut annual cash interest payments by up to $4.1 million.

"We believe our exchange offer will strengthen our financial position, improve our capital structure and reduce our cash expenditure, without adversely affecting our product development programs," the company said in a prospectus filed with the Securities and Exchange Commission.

The offer expires at midnight ET on Dec. 17.

CIBC World Markets is dealer manager for the exchange.

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