Alza Corp. of Palo Alto, Calif., has filed a registration statement withthe Securities and Exchange Commission for a proposed offering ofLiquid Yield Option Notes (LYONs) which could add $300 million tothe company's coffers. Alza's LYONs are zero coupon subordinatednotes due in 2014 which are convertible into Alza common stock. Theconversion price for Alza stock has not been set.According to an Alza spokesman, Alza will be allowed to deductinterest on the notes as it accrues but will not have to pay out any cashuntil the 20-year notes expire in 2014. At that time, the company willpay principal plus interest. The face amount of the notes is $825million and the $300 million in proceeds to Alza suggests that the noteshave a 5 percent yield.The spokesman said that LYONs were less diluting than otherfinancing options, such as a public equity offering, and would allow thecompany to retire its short-term commercial paper and put a long-termfinancing vehicle in place. Approximately $250 million of the proceedshave been earmarked to retire the company's outstanding commercialpaper debt and the remainder will be used for general corporatepurposes. Merill Lynch & Co. will act as the underwriter for theoffering.Alza, a drug delivery firm, reported total revenues in 1993 of $234million and a net income of $45.6 million, including one-time chargesagainst the company's balance sheet. _ Lisa Piercey
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