Cell Therapeutics accepts $52.92 million of convertibles in exchange

New York, June 19 - Cell Therapeutics, Inc. said it accepted tenders for $52.917 million principal amount, or 44.5%, of its $118,943,000 total of five series of its convertible notes in the exchange offer for the securities.

The company said the final amount was $1.9 million less than the preliminary figures previously released because separate notices were received from two different brokers for the same notes.

The exchange will result in the issuance of 24.2 million shares and the payment of $7.1 million in cash.

Cell Therapeutics said it will reduce its debt by $52.9 million and cut $3.3 million from its annual interest expense. Shareholders' equity will increase by $43.7 million.

Specifically, the company said it accepted for exchange:

• $11,787,000, or 21.4%, of its $55.15 million of 4% convertible senior subordinated notes due 2010;

• $12,087,000, or 52.6%, of the $23 million of 5.75% convertible senior notes due 2011;

• $5.5 million, or 78.6%, of the $7 million of 6.75% convertible senior notes due 2010;

• $23,208,000, or 69.4%, of the $33,458,000 of 7.5% convertible senior notes due 2011; and

• All $335,000 of its 9% convertible senior notes due 2012.

The offer ended at 5 p.m. ET on June 16. The deadline had been extended from June 10.

On June 3, the company amended the offer to be a fixed-price tender offer rather than a modified Dutch auction tender offer. It also changed the offer to increase the exchange cap from $89.2 million of notes.

Holders will receive $134.50 in cash and 458 shares of common stock for each $1,000 principal amount of notes tendered plus accrued interest up to but excluding the settlement date. This amounts to a total of $7.4 million in cash and about 25.1 million shares for the tendered notes.

Settlement is set for June 22.

As already reported, based on the company's closing stock price of $1.72 (Nasdaq: CTIC) on June 2, those 458 shares were worth $787.76. With the cash, that puts the total value of the offer at $922.26 per note.

Originally, Cell Therapeutics was offering to exchange shares and cash with a value of $250 to $300 per $1,000 principal amount of convertibles, and the exact dollar amount per convertible was going to be determined via a modified Dutch auction.

This was later amended to between $550 and $600 for each $1,000 principal amount of convertibles. In each case, the cash portion was going to be $200.

When the offer began on May 12, the company said it expected to use up to $17.8 million of cash on hand and proceeds from a private placement of stock and warrants to a single institutional investor for the cash portion of the exchange.

The company already noted that it believes reducing its debt is necessary in order for its business to operate in light of its current asset base and revenue prospects.

The information agent was Georgeson Inc. (212 440-9800 for banks and brokerage firms and 800 457-0759 for others). Piper Jaffray & Co. was the financial adviser.

Cell Therapeutics is a Seattle-based biopharmaceutical company developing treatments for cancer.

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