Holders of 46% of Cell Therapeutics' nearly $119 million in convertible debt agreed to tender their notes in exchange for cash and common stock, the Seattle-based drug developer said Wednesday.
The preliminary results of the debt tender offer, which expired Tuesday night, cuts the company's debt burden by $54.8 million and will reduce future annual interest expenses by $3.4 million.
But holders of more than half of Cell Therapeutics' debt chose not to accept the company's below-par bid for their notes, which means the company remains in shaky financial straits.To put the 46% acceptance figure in perspective, Cell Therapeutics was aiming to convince 70% of note holders to agree to the debt tender offer in May, before the company raised its exchange offer earlier this month. The $64 million in debt still on Cell Therapeutics' books includes $43 million in notes due in 2010. Only 30% of the 2010 holders agreed to tender their notes. Cell Therapeutics will pay out $7.4 million in cash and 25.1 million shares of company stock to satisfy those note holders who accepted the debt tender offer. Previously, Cell Therapeutics warned that its remaining cash was only sufficient to fund the company through August. Recent cost-cutting measures and the partial easing of interest payments may extend that cash further, but it's not clear by how long because the company didn't update its financial guidance Wednesday.