Oscient holders swap some 5% convertibles due 2009 for 12.5% convertibles due 2011

By Angela McDaniels

Tacoma, Wash., April 29 - Oscient Pharmaceuticals Corp. said funds associated with Maverick Capital and some other holders exchanged the 5% convertible promissory notes due 2009 they held, as well as accrued interest, for $7.76 million principal amount of 12.5% convertible guaranteed senior notes due 2011.

The exchange occurred Monday, according to an 8-K filing with the Securities and Exchange Commission.

The company issued the 12.5% convertibles in denominations of $1,000 and is issuing a total of 707 shares of its common stock to settle amounts in excess of integrals of $1,000.

There is now about $9.1 million principal amount and accrued interest of 5% convertibles outstanding.

In January, the maturity date of the 5% convertibles was extended to Dec. 1, 2009 from Feb. 6.

Despite the reduction in principal amount and the maturity extension, Oscient does not believe it will have enough cash to repay the remaining convertibles and continue current operations unless it is able to raise more capital and/or refinance or amend the terms of the convertibles.

The company said that if it is unable to or does not obtain adequate financing, it may have to take other measures to significantly reduce expenses that will have a material adverse effect on its business and/or it may seek bankruptcy protection.

As previously reported, the Waltham, Mass.-based pharmaceutical company said in March that its auditors questioned its ability to continue as a going concern, and Oscient raised the possibility that it could be facing bankruptcy before the end of the year.

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