AtheroGenics 4.5% convertibles repayment to leave company short of cash for 2009

By Jennifer Chiou

New York, May 9 - AtheroGenics, Inc.'s repayment of its $30.5 million of 4.5% convertible debentures when they become due on Sept. 1, 2008 will leave the company short on cash during 2009, according to a 10-Q filing with the Securities and Exchange Commission.

Although the company said that it expects to have enough cash on hand to repay all amounts due for the convertibles as well as to fund 2008 operations, the repayment will leave substantially less cash to fund ongoing operations during 2009.

AtheroGenics said that its strategy is to raise additional capital, enter into collaboration arrangements to fund the development and commercialization of AGI-1067 or restructure the 4.5% convertibles before they become due.

The company also received a notice from Nasdaq of a violation of the listing standard related to failure to maintain a closing bid price for its common stock above $1.00.

If the company's stock fails to be listed on Nasdaq or another national securities exchange, noteholders will have the right to require AtheroGenics to redeem the notes at face value.

If the maturity of the outstanding notes were accelerated, the company said it would attempt to refinance or restructure the obligations.

AtheroGenics said that if it does not have sufficient liquidity to fund operations or pay any of its debt when due, it may seek relief under Title 11 of the U.S. Bankruptcy Code.

Atlanta-based AtheroGenics develops drugs for the treatment of chronic inflammatory diseases.

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