DOV Pharmaceutical holders tender 96.4% of 2.5% debentures under exchange offer

By Caroline Salls

Pittsburgh, March 15 - DOV Pharmaceutical, Inc. obtained the required tenders in the exchange offer for its 2.5% convertible subordinated debentures due 2025, according to a company news release.

The exchange offer expired Wednesday at 5 p.m. ET.

The exchange offer was conditioned upon the valid tender of at least 96.3% of the total principal amount of outstanding debentures, and DOV received tenders of and accepted for exchange a total of $67.43 million principal amount of debentures, representing 96.4% of the $70 million principal amount outstanding.

In exchange for the tendered debentures, DOV said it will deliver a total cash payment of $14.3 million to exchange agent Wells Fargo Bank, NA, as well as a total of 439,784 shares of series C convertible preferred stock and 100,000 shares of series D convertible preferred stock to the holders who tendered their debentures in the exchange offer.

The series C and D convertible preferred stock will be convertible by the holders into shares of common stock following stockholder approval and filing of an amendment to DOV's charter increasing the number of shares of authorized common stock.

The series C convertible preferred stock also will automatically convert 30 days following the filing of the amendment to DOV's charter or earlier in some circumstances.

Generally, DOV said the series C convertible preferred stock votes with the common stock as a single class on an as-converted basis and entitles the holders of a majority of the series C convertible preferred stock to initially appoint a majority of DOV's board of directors.

The series D convertible preferred stock has no voting rights except as required by law, does not have any initial stated liquidation preference, does not mandatorily convert into common stock and restricts a holder's ability to convert if the holder would beneficially own more than 9.9% of the company's capital stock entitled to vote.

The debentures that were not tendered in this exchange offer will remain outstanding under the original terms of the indenture, with a contractual interest rate of 2.5% and a maturity of 2025.

Additionally, DOV said it will issue 30 million warrants to holders of its common stock to allow holders to purchase additional shares of common stock with an exercise price of $0.523 per share.

The warrants will be exercisable beginning July 1 until Dec. 31, 2009 and will be issued to holders as of a record date to be set by DOV's board of directors.

"As a result of the successful closing of the exchange offer, we will continue our focus on the development of products emanating from our core areas of research and early stage clinical programs and work to build shareholder value," chief executive officer Barbara Duncan said in the release.

DOV is a biopharmaceutical company based in Somerset, N.J.

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