Cell Genesys will offer to exchange its 3.125% convertibles for new 3.125% convertibles

By Susanna Moon

Chicago, May 11 - Cell Genesys Inc. said it plans an offer to exchange its $68.3 million principal amount of outstanding 3.125% convertible senior notes due in 2011 for new 3.125% convertible senior notes due in May 2013.

For each $1,000 principal amount, the company will offer $310 of new 3.125% convertibles, $500 in cash plus accrued interest and $140 of common stock equal to 206 shares.

The new notes will have a conversion price of $0.68 per share.

The company entered into an agreement on May 10 with Tang Capital Partners, LP to begin the exchange offer.

On May 5, Tang Capital filed a creditor derivative lawsuit in the Court of Chancery of the State of Delaware against Cell Genesys seeking a declaration that the company is insolvent and an injunction prohibiting previously disclosed executive retention payments.

Tang Capital has agreed to tender into the exchange offer and withdraw the lawsuit if the exchange offer is completed.

The offer requires that at least 87.5% of the notes be tendered.

The San Francisco-based company develops treatments for cancer.

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