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May 29, 2012 /PRNewswire/ -- Cell Therapeutics, Inc. ("CTI") (Nasdaq and MTA: CTIC) today announced that it has entered into an agreement to sell, subject to customary closing conditions,
$40 million of shares of its Series 15 Convertible Preferred Stock and warrants to purchase shares of its common stock (and the shares of common stock issuable from time to time upon conversion of the Series 15 Convertible Preferred Stock and exercise and exchange of the warrants) in a registered offering to an institutional accredited investor (the "Initial Purchaser") in two
$20 million tranches (the "Offering").
CTI plans to use the net proceeds from the Offering to finance the purchase price and related fees and expenses of the acquisition of pacritinib from S*BIO Pte Ltd., for which Jefferies & Company, Inc. was the financial advisor to CTI. CTI also plans to use the net proceeds from the Offering for activities related to preparing for the commercial launch of Pixuvri™ in the European Union and for general corporate purposes, which may include, among other things, funding research and development, preclinical and clinical trials, the preparation and filing of new drug applications, the acquisition of complementary businesses, technologies or products and general working capital.
CTI expects to initially issue 20,000 shares of Series 15 Convertible Preferred Stock (the "Series 15-1 Preferred Stock") (convertible into an aggregate of 20,000,000
shares of common stock issuable from time to time upon conversion at a conversion price of
$1.00 per share) and warrants to purchase up to an aggregate of 13,333,333 shares of common stock with an exercise price per share of
$1.092 on or around
May 29, 2012 (the "Initial Closing") for gross proceeds of
Subject to certain terms and conditions, the Initial Purchaser has also agreed to purchase and CTI has agreed to sell a second tranche of 20,000 shares of Series 15 Convertible Preferred Stock (the "Series 15-2 Preferred Stock," and together with the Series 15-1 Preferred Stock, the "Series 15 Preferred Stock"), and warrants to purchase shares of common stock on the 60th day after the Initial Closing for gross proceeds of
$20 million (the "Second Closing"). The exercise price of the warrants issued in the Second Closing will equal a 20% premium to the closing bid price of CTI's common stock on The NASDAQ Capital Market calculated one trading day prior to the date of the Second Closing. The conversion price of the Series 15-2 Preferred Stock shall equal the closing bid price of CTI's common stock on The NASDAQ Capital Market calculated one trading day prior to the date of the Second Closing, plus
In the event that on the date of the Second Closing, the Initial Purchaser is unable to purchase the entire
$20 million because it would cause the Initial Purchaser to own more than 9.9% of CTI's common stock or due to CTI restrictions on issuance, the Initial Purchaser has agreed to fund a minimum of
$10 million and in any event the maximum amount of the
$20 million the Initial Purchaser can fund under these restrictions. CTI will be subject to restrictions on the sale of securities through 30 days after the date of the Second Closing, subject to certain exceptions. If the Initial Purchaser is unable to fund the entire remaining unfunded balance of the
$20 million within 30 days from the Second Closing, CTI will not be subject to any restriction on the issuance of additional securities upon the expiration of such 30 day period.
The Series 15 Preferred Stock will automatically convert into shares of common stock in certain circumstances. The Series 15 Preferred Stock will receive dividends in the same amount as any dividends declared and paid on shares of common stock and will have no voting rights on general corporate matters. All of the warrants issued in the Offering are exercisable beginning on or after the date of issuance and expire five years after the date of issuance. If the stock price is less than the exercise price, the warrants may also be exchanged for shares based on a specified Black-Scholes value formula subject to certain limitations. CTI may instead elect to pay all or some of such value in cash. If CTI elects not to pay in cash, is unable to issue sufficient shares without shareholder approval and has not obtained shareholder approval within 90 days after an exchange notice is received, CTI will issue a note for the unpaid portion of the value payable one year thereafter.