ViroPharma pulls exchange

New York, June 23 - ViroPharma Inc. said it abandoned its exchange offer for its existing 6% convertible subordinated notes due 2007.

The company said the condition that 80% of the existing notes be tendered was not satisfied.

By June 21, holders had tendered $4.7 million or 3.7% of the $127.9 million outstanding.

ViroPharma noted it had extended the offer twice to hold informal discussions with significant noteholders about revising the terms.

The terms proposed by the noteholders related to equity dilution and price were not acceptable, ViroPharma said.

The company added that it is looking at alternative methods of restructuring its convertible subordinated debt.

"This transaction, although not completed, has been instructive in better understanding the expectations of the current noteholders and our shareholders. Our intent is to find a solution that is fair to all parties and we believe one will be found that serves everyone's best interests prior to maturity of the outstanding notes," said Michel de Rosen, ViroPharma's chief executive officer, in a news release.

ViroPharma will also not make the offering of new convertibles for cash.

ViroPharma said on June 17 it had fixed the terms of its exchange offer. The company said the new Plus Cash Notes it is offering in exchange for its existing 6% convertibles will be exchangeable for 180.95 shares of its common stock plus $500 in cash, which ViroPharma may pay in stock under certain circumstances.

ViroPharma may exercise the auto-convert option to exchange the new notes for stock any time the closing price of its common stock exceeds $5.53 for 20 out of 30 consecutive trading days.

The base share amount of 180.95 was determined by dividing $952.38 minus the $500 plus cash amount by the simple average of the closing bid price of ViroPharma's common stock on June 3, 4, 7, 8 and 9. The auto-conversion price was determined by dividing $1,500 less the $500 plus cash amount by 180.95, the number of base shares.

The terms are the same as previously announced but were subject to possible revision because the exchange has been extended.

At the last announcement on June 15, ViroPharma said it extended its exchange offer for its existing 6% convertibles to June 21 from midnight ET on June 14.

As of June 14, holders had tendered $4.9 million or 3% of the $127.9 million outstanding.

ViroPharma said on June 9 it had fixed terms of the exchange offer - terms were the same as those announced Thursday.

ViroPharma also extended the exchange to midnight ET June 14 due to the unexpected closing of the markets on the previous expiration date of June 11.

ViroPharma said on May 26 it has amended its exchange offer for its existing 6% convertible subordinated notes due 2007.

The company said it is now setting a minimum price of $2.50 to be used in calculating the number of base shares.

The minimum participation condition is 80% of the existing convertibles.

In addition, ViroPharma extended the exchange to June 11 from midnight ET on May 25.

As of May 25, $7.0 million or 5% of the existing convertibles had been tendered.

ViroPharma said on May 21 it had set pricing on the exchange offer - figures that were recalculated because of the extension to the offer. The company said the new Plus Cash Notes it is offering in exchange for its existing 6% convertibles will be exchangeable for 257.62 shares of its common stock plus $500 in cash, which ViroPharma may pay in stock under certain circumstances.

ViroPharma may exercise the auto-convert option to exchange the new notes for stock any time the closing price of its common stock exceeds $3.88 for 20 out of 30 consecutive trading days.

The base share amount of 257.62 was determined by dividing $952.38 minus the $500 plus cash amount by the simple average of the closing bid price of ViroPharma's common stock on May 17, 18, 19, 20, and 21. The auto-conversion price was determined by dividing $1,500 less the $500 plus cash amount by 257.62, the number of base shares.

ViroPharma announced on April 28 that it had begun an exchange for its existing 6% convertibles.

ViroPharma said that it plans to offer new convertibles in exchange for its existing 6% convertible subordinated notes due 2007 and will also offer for cash $25 million of the new securities.

Under the terms of the exchange, ViroPharma will offer up to $99.1225 million principal amount of 6% convertible senior Plus Cash Notes in exchange for up to all its existing $127.9 million principal amount of 6% convertibles.

ViroPharma said the exchange is intended to extend the maturity of its debt by more than two years, which, the company said, would be "more consistent with its current business plans."

The exchange will also "significantly" reduce the conversion price of the notes.

The extra cash will provide resources to execute the business and operational plans.

According to S-3 and S-4 registration statements filed with the Securities and Exchange Commission, ViroPharma is offering $775 principal amount of the new convertibles for each $1,000 principal amount of the existing convertibles.

For conversions before June 1, 2006 there is a coupon make-whole.

The existing convertibles convert at $109.15.

Interest on the new convertibles will be at 6% payable in cash or stock at ViroPharma's option.

They will mature on June 1, 2009 and be callable from June 1, 2006 onwards.

Piper Jaffray & Co. is dealer manager for the exchange and placement agent for the cash offer (contact Jeffrey Winaker or Brian Sullivan at 415 984-5142).

ViroPharma is an Exton, Pa., pharmaceutical company.

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