Cell Therapeutics ups payment in exchange offer for up to $89.2 million of convertibles

By Angela McDaniels

Tacoma, Wash., May 19 - Cell Therapeutics, Inc. increased the number of shares it will issue in the exchange offer for up to $89.2 million principal amount of five series of convertible notes, according to a company news release.

The company is now offering to exchange shares of common stock and cash with a value of $550 to $600 for each $1,000 principal amount of convertibles.

The exact dollar amount per convertible is being determined via a modified Dutch auction. The number of shares will be based on the average of the daily volume-weighted average price of the stock from May 19 through June 2 and will be announced by the opening of trading on June 3.

The original offer had been for $250 to $300 per $1,000 principal amount of convertibles.

The cash portion will continue to be $200.

Holders will also receive accrued interest up to but excluding the settlement date in the form of stock.

The company said it will issue no more than 30.63 million shares in the offer.

Notes eligible for tender are the company's 4% convertible senior subordinated notes due 2010, 5.75% convertible senior notes due 2011, 6.75% convertible senior notes due 2010, 7.5% convertible senior notes due 2011 and 9% convertible senior notes due 2012.

The offer is conditioned on a minimum of $83,260,100 principal amount of notes being tendered. As of May 11, there was $118.9 million of notes outstanding.

The exchange offer began on May 12 and will expire at 5 p.m. ET on June 10.

The company expects 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 said 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 is Georgeson Inc. (212 440-9800 for banks and brokerage firms and 800 457-0759 for others). Piper Jaffray & Co. is the financial adviser.

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

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