The Liposome Co. is getting rid of stock overhang and quarterlydividend payments by calling for redemption of all outstanding sharesof Series A convertible exchangeable preferred stock.
The redemption date will be Oct. 14, 1996, at which time holders canredeem the shares for $26.96 in cash _ the redemption price of$26.40 plus 56 cents of accrued dividend _ or convert them into 1.95shares of Liposome common stock (NASDAQ:LIPO). As long as thestock is more than $13.86 holders would realize more from the latteroption.
The company disclosed the redemption data after the market closedFriday. Its stock gained 63 cents Monday to close at $17.25.
The Princeton, N.J., company also said it reached a standby purchaseagreement with an international institutional investor who willpurchase shares that are not converted into common stock. Thatobligation is backed by a bank letter, the company said.
The Liposome Co. issued the Series A stock, represented bydepositary shares, in a January 1993 financing that grossed about $69million. The company had to wait at least three years to call thestock, which has been earning 7.75 percent interest.
The company has paid about $17.4 million in dividends on thepreferred stock since it was sold, said Brooks Boveroux, TheLiposome Co.'s vice president, investor relations.
The company in February 1996 called for half of the Series A stock,which originally included about 2.7 million depositary shares. Nowthere are about 1.2 million depositary shares outstanding.
If all are converted into stock (and they should be with the standbypurchase agreement) there will be an additional 2.3 million commonshares issued, bringing the outstanding shares to about 36 million. Noother preferred stock or warrants are outstanding, Boveroux said.
Chairman and CEO Charles Baker said, "By making this call forredemption, The Liposome Co. will avoid approximately $2.3 millioneach year in dividend payments, which can be directed to help fundthe company's product development programs. The preferred stockoffering has represented a very successful financing for both thecompany and the preferred shareholders.
"The company raised $65 million, "Baker said, "which enabled it tocommercialize its first product, Abelcet. Initial purchasers of thepreferred stock will have received a return of more than 50 percent,including dividends, based on the conversion value into commonstock today."
Abelcet, an amphotericin B lipid complex, was approved in the U.S.in November 1995 for treatment of the fungal infection, aspergillosis,in patients refractory to or intolerant of conventional amphotericin B.It also is approved in 10 countries in Europe. (See BioWorld Today,Nov. 22, 1995, p. 1.)
Boveroux said sales of Abelcet in the first half of 1996 were about$22.5 million, with about 83 percent of them coming in the U.S.
In addition to other possible applications for Abelcet the company isdeveloping TLC C-53, or liposomal prostaglandin, for acuterespiratory distress syndrome, and TLC D-99, or liposomaldoxorubicin, for oncology indications. Boveroux said an ongoingPhase III study of TLC C-53 should be completed in mid-1997. TLCD-99 is in Phase III studies for metastatic breast cancer. n
-- Jim Shrine
(c) 1997 American Health Consultants. All rights reserved.