Halsey Drug Announces the Closing of Up to $22.8 Million in Financing
biz.yahoo.com
Tuesday June 1, 8:57 am Eastern Time
Company Press Release
ROCKFORD, Ill.--(BUSINESS WIRE)--June 1, 1999--Halsey Drug Co., Inc. (AMEX-HDG) today announced the completion of a private offering (the ''Offering'') of convertible debentures and warrants to Oracle Strategic Partners, L.P. and certain other existing security holders of the Company in an aggregate principal amount of up to approximately $22.8 million.
At the closing of the Offering, the Company issued approximately $12.8 million in convertible debentures, $5 million of which were issued to Oracle and approximately $7 million of which were issued in exchange for 10% convertible bridge loan notes.
The Purchase Agreement executed by Oracle and the other investors at the closing of the Offering (the ''Purchase Agreement'') provides for an additional investment by Oracle of up to $10 million to be funded in two installments of $5 million each. The first installment of the additional $10 million Oracle investment will be funded upon the clearance by the Federal Trade Commission of a notification and report to be filed under the Hart-Scott-Rodino Antitrust Improvements Act and the filing of a charter amendment approved at the Company's 1998 Annual Shareholders Meeting granting voting rights to the holders of the Company's debentures issued in March 1998. The Company anticipates that this condition will be satisfied during July 1999. The second $5 million installment will be funded by Oracle upon the later to occur of (i) the Company's receipt of shareholder approval of the Offering, including an increase in the Company's authorized shares to allow conversion of the debentures and warrants issued in the Offering, and (ii) receipt of approval from the FDA for a product for which an Abbreviated New Drug Application has been filed with the FDA. The Company anticipates that this condition will be satisfied during the fourth quarter of 1999.
The Offering consists of 5% senior secured convertible debentures due March 15, 2003 (the ''Debentures'') and common stock purchase warrants (the ''Warrants''). The Debentures rank pari passu with the Company's 5% convertible debentures issued in March 1998 to the Galen Investor Group (the ''1998 Debentures''), are senior to all other Company obligations and are secured by a first lien on all Company assets. The Debentures are convertible into the Company's common stock at a price of $1.404 per share (the conversion price of the 1998 Debentures). In addition, the Company can force the conversion of the Debentures into the Company's common stock provided the stock trades at or above certain levels for a specified period following the two year anniversary of the closing.
The Warrants have a term of seven years and are exercisable for an aggregate of 4,618,702 shares of the Company's common stock. The Warrants have an exercise price of $1.404 per share for 2,309,351 Warrants and an exercise price of $2.285 per share for the remaining 2,309,351 Warrants.
As part of the completion of the Offering, and in accordance with the terms of the Purchase Agreement, the Board of Directors nominated to the Board of Directors, subject to shareholder approval, Joel D. Liffman, a General Partner of Oracle.
Commenting, Michael Reicher, President & CEO, stated that ''this private placement completes the re-capitalization of the Company and provides the resources necessary to allow the Company to implement its long term strategies. Specifically, the Company intends to utilize these funds to expand and modernize its manufacturing facilities, to bring products currently in the development pipeline to the market, enhance in-house research and development activities and enter into product development alliances with other Companies. Also, the Company is pleased to have Oracle as a strategic partner. The Company expects to benefit significantly from their knowledge of the pharmaceutical industry.''
Halsey Drug Company, Inc. together with its subsidiaries, is a manufacturer of generic drugs in solid and liquid dosage forms sold to distributors, wholesalers, drug store chains, institutions, government agencies and other pharmaceutical manufacturers nationwide, as well as a manufacturer of active pharmaceutical ingredients.
The statements in this press release are forward looking and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Investors are cautioned that forward looking statements involve risk and uncertainties which may affect Halsey's business prospects, including economic, competitive, governmental, technological and other factors discussed in filings with the Securities and Exchange Commission.
This and past press releases for Halsey Drug Co., Inc. are available at Halsey's web site at www.halseydrug.com.
Contact:
Halsey Drug Co., Inc., Rockford
Peter A. Clemens
Vice President and Chief Financial Officer
815/399-2060
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