Cell Therapeutics ( CTIC) is working overtime to push its stock price and trading volume higher so that holders of almost $119 million in the company's debt will accept more stock and less cash in exchange for their notes.

The only way the plan works, however, is if debt holders can quickly and easily sell their stock into the open market. For that to happen, Cell Therapeutics needs to create liquidity and lots of stock price momentum.

This helps explain Monday's dramatic midday stock halt as well as Wednesday's press release on a small and inconsequential study of the company's cancer drug Opaxio. Opaxio, by the way, is the company's rebranding of a failed cancer drug previously known as Xyotax, for those investors new to the Cell Therapeutics story.

Tuesday night, Cell Therapeutics raised the exchange rate of its current debt tender offer significantly, but with a catch: Bondholders have to accept almost twice as much stock and relatively little cash this time around.

Cell Therapeutics is offering $134.50 in cash and 458 shares of common stock for each $1,000 in convertible debt. This works out to a total exchange offer of just over 92 cents on the dollar, based on the company's closing stock price Tuesday.

That's a significant raise from the prior exchange offer of 55 cents to 60 cents on the dollar and may just get debt holders to go along with the deal.

However, the higher offer requires debt holders to accept 85% of the exchange offer in Cell Therapeutics common stock and only 15% in cash. The previous offer gave bondholders 35% cash and 65% stock.

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