IRVINE, Calif., April 10 /PRNewswire/ -- NeoTherapeutics, Inc. (Nasdaq: NEOT - news, NEOTW - news) announced today the closing of a major financing transaction with two investor groups who have previously invested with the Company. In conjunction with this new financing, the investors have also eliminated the remaining reset provision of a previous financing. The new transaction consists of an initial tranche at the closing of $10 million in 5% subordinated convertible debentures due April 6, 2005. In addition, subject to certain conditions, the investors have agreed to fund two future tranches of up to $10 million each and redeemable warrants to purchase up to 4 million shares of common stock over a two-year period (the ``B' warrants). The ``B' warrants can be redeemed in part by the Company as frequently as several times per week and when called for redemption can be exercised by the investors at 97% of the per share closing market price (i.e. a discount of 3%) and are exercisable at the sole option of the investors at the price of $33.75 per share. Based on the current market price, the ``B' warrants could potentially generate approximately $69 million of equity financing. The number of ``B' warrants that are exercisable at each redemption are subject to average daily volume restrictions.
The debentures are convertible into common stock at $20.25 per share for the first 90 days after the closing. Thereafter, they are convertible at the lesser of $20.25 per share or 101% of the market price of the common stock as determined under the agreement. The two additional tranches of convertible debentures of up to $10 million each, 5 and 10 months after the closing, are at the option of either the Company or the investor. If at the option of the Company, the tranches are under similar terms and conditions as the initial tranche. If at the option of the investor, the two tranches are at the fixed conversion price of $20 per share. The amount available under the two additional tranches will be reduced pro-rata to the extent that the investors have exercised or the Company has redeemed the ``B' warrants to purchase common stock. The investors also received five-year warrants to purchase up to 265,000 shares of common stock (the ``A' warrants). The ``A' warrants are exercisable at $19.672 per share |
