NEW YORK, Sept. 15 /PRNewswire-FirstCall/ -- Cell Therapeutics, Inc. (“CTI” or the “Company”) today announced that a single institutional investor has agreed to purchase, for $9 million, newly issued 10% Convertible Senior Notes due 2012, with a conversion price of $1.27 per share. The Company has a put right subject to price, volume and other requirements exercisable no later than October 15, 2008 for the same institutional investor to purchase an additional $9 million of 10% Series B Convertible Senior Notes due in 2012.
The new Notes, and the follow-on Notes would similarly have a $9 million initial principal balance and feature a make-whole provision entitling the holder, upon any conversion of the Notes, to receive the interest payable through scheduled maturity, less any interest paid before conversion. The Company expects to receive net proceeds of approximately $5.4 million from the Notes (before payment of fees and expenses), after depositing amounts in escrow for the make-whole provision. The Notes will rank equal in right of payment with all existing and future unsecured senior indebtedness of the Company.
Pursuant to the note agreement, CTI shall make a payment in the amount of $150,000 as an inducement for the investor and its affiliates to convert 1,000 shares of Series C Preferred Stock owned by the investor into Common Stock of the Company pursuant to the provisions of the Company’s articles of incorporation. In connection with this securities transaction, CTI shall also make a payment to the investor and its affiliates in the amount of $1,225,000 in exchange for the prospective satisfaction of 50% of any final judgment which may ever be rendered on their pending claims against the Company. If the Company exercises its put right, as to the second $9 million investment, additional similar payments of $150,000 and $1,225,000 would be made and the balance of those claims would be extinguished.
Rodman & Renshaw, LLC, a subsidiary of Rodman & Renshaw Capital Group, Inc. , acted as the exclusive placement agent for the transaction.
A prospectus supplement relating to the Convertible Notes to be issued in the offering will be filed with the Securities and Exchange Commission. Copies of the prospectus supplement and accompanying base prospectus may be obtained directly from Cell Therapeutics, Inc., 501 Elliot Avenue West, Suite 400, Seattle, Washington 98119.
This press-release contains forward-looking statements that involve a number of risks and uncertainties, the outcome of which could materially and/or adversely affect future results. This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful. The Company continues to have substantial amount of debt outstanding and the quarterly interest expense associated with the debt is significant; the Company’s operating expenses continue to exceed its net revenues and the Company will continue to need to raise capital to fund its operating expenses; as well as other risks listed or described from time to time in the Company’s most recent filings with the SEC on Forms 10-K, 8-K and 10-Q. Except as required by law, the Company does not intend to update any of the statements in this press release upon further developments.
CONTACT: Media, Dan Eramian, +1-206-272-4343, cell, +1-206-854-1200, or
Lindsey Jesch, +1-206-272-4347, fax, +1-206-272-4434, media@ctiseattle.com,
or Investors, Ed Bell, +1-206-272-4345, fax, +1-206-272-4434,
invest@ctiseattle.com, all of Cell Therapeutics, Inc.
Web site: http://www.celltherapeutics.com/
