Zila skips third interest payment on convertibles, gets forbearance

By Lisa Kerner

Charlotte, N.C., July 31 - Zila, Inc. is in default on its senior secured convertible notes, according to an 8-K filed with the Securities and Exchange Commission on Friday.

The company said it failed to make the July 31 quarterly interest payment due under the notes. In addition, Zila did not make the quarterly interest payments due on Jan. 31, 2009 and April 30.

According to Zila, it has not received a default notice from the investors.

The notes holder, under a July 28 forbearance agreement, will not exercise its rights to accelerate the payment of the outstanding principal amount and interest as a result of Zila's failure to make payments due on Jan. 31, 2009, April 30 and July 31.

However, due to the defaults, all amounts outstanding under the notes will now accrue interest at the default rate of 15%.

Phoenix-based Zila is a cancer diagnostic company focused on developing technologies to detect oral cancer.

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