This is interesting
North American Vaccine to Retire $8.4 Million in Debentures In Exchange for 550,000 Shares of Common Stock
Reflects One of Several Steps Being Taken to Improve Financial Position
COLUMBIA, Md., June 17 /PRNewswire/ -- North American Vaccine announced today that it has reached agreement to retire $8.4 million of its 6.5% convertible subordinated notes in exchange for 550,000 shares of common stock. The calculated value of the common stock in this exchange is $15.28 per common share. Yesterday's closing price on the American Stock Exchange for the Company's common stock was $4.50. The Company will save approximately $546,000 in annual interest charges as a result of this exchange. The exchange was privately negotiated with a single holder of the notes.
Mr. Lawrence Hineline, Vice President of Finance for North American Vaccine, stated "The debt-to-equity transaction announced today is part of our continuing focus to improve the Company's financial position and to maximize the available funding to develop key products in our rich pipeline."
The 6.5% convertible subordinated notes were issued in May 1996 and are convertible into common stock at a conversion price of $24.86 per share. These notes mature on May 1, 2003. As of March 31, 1999, the principal amount of the outstanding notes was $83.7 million and following this transaction, the principal balance of the outstanding notes will be $75.3 million. Interest on the notes is payable semi-annually on May 1 and November 1 each year. As of March 31, 1999, there were 32,281,576 shares of common stock outstanding.
As a result of this debt-to-equity exchange, the net adjustments to the Company's balance sheet will reflect a decrease in long-term debt and an increase in shareholders' equity by $8.4 million. In addition, the conversion will generate a one-time non-cash debt conversion expense during the second quarter of approximately $950,000. The Company anticipates that any taxable income realized by this transaction will be offset by current and pre-existing net operating losses. |
