The Liposome Co. is reducing annual dividend payments by about$2.7 million by calling half the outstanding Series A ConvertibleExchangeable Preferred Shares for redemption.

The 2.7 million depositary shares were issued in a January 1993financing that brought in about $69 million. The Liposome Co., ofPrinceton, N.J., which has been paying 7.75 percent dividends on theshares, could not call for redemption for at least three years.

Those opting to redeem the shares for cash will receive about $26.85.More likely is that the depositary shares each will be converted into1.95 shares of common stock (NASDAQ:LIPO), currently worthabout $38.50 at Friday's closing price of $19.75, which was down 25cents on the day.

If all shares are converted, The Liposome Co. would issue about 2.66million new shares. The company currently has nearly 30 millionshares outstanding, and said it may decide to call the remainingoutstanding depositary shares.

The redemption date will be March 25, 1996, the same dayconversion rights will expire.

The Liposome Co. entered into an agreement with Hambrecht &Quist LLC and UBS Securities Inc., both of New York, for thepurchase of any shares that would have been converted had theholders not opted to redeem the shares for cash.

The Liposome Co. is marketing its lead drug, a liposomal formulationof amphotericin B for fungal infections called Abelcet, in the U.S.and parts of Europe. TLC D-99 is in three Phase III studies formetastatic breast cancer. And TLC C-53 is in a pivotal study foracute respiratory distress syndrome. The first results from the D-99and C-53 studies are expected in 1997, a company official said. _Jim Shrine

(c) 1997 American Health Consultants. All rights reserved.