SEATTLE, April 30 /PRNewswire-FirstCall/ -- Cell Therapeutics, Inc. ("CTI" or the "Company") (Nasdaq: CTIC; MTA) today announced that it has entered into agreements to sell units of securities for approximately $64.5 million, including new Series E Convertible Preferred Stock (the "Preferred Stock"), 13.5% Convertible Senior Notes due 2014 (the "Notes") and warrants to purchase shares of common stock, no par value (the "Common Stock") to a single institutional investor. The aggregate price per unit was $0.3475 cents above the closing bid of $0.79 per share or $1.14 per unit. Also included is a one- year right for such investor to purchase up to $67.5 million of such securities in the future.
The 9,000 shares of Preferred Stock are convertible into 11,392,405 shares of Common Stock. The Preferred Stock, representing $9 million in stated value, can also be exchanged by such investor after 30 days into Notes. The $36 million initial principal amount of Notes bear interest at 13.5% per annum and are convertible at any time for shares of CTI common stock. The Notes feature a make-whole provision upon conversion entitling the holder to receive a fixed amount, less any interest paid before conversion. The Company expects to receive net proceeds of approximately $28.125 million from the initial closing of the offering. The Notes will rank equal in right of payment with all existing and future unsecured senior indebtedness of CTI.
The investor will also receive warrants to purchase 28.4 million shares of common stock with an exercise price of $0.95 per share (equal to 120% of today's closing bid price), for an aggregate potential exercise price of $27.1 million. The investor will also receive a second warrant which entitles it to purchase $67.5 million of additional notes and warrants. The Company will have the ability to accelerate the termination date of the warrant in the event that the Company meets one of two potential milestone events as well as other conditions to be more fully described in the Company's Form 8-K for this transaction.
Up to $5,250,000 in principal amount of existing 9% Convertible Senior Notes due 2012, along with all warrants issued in connection with such notes, may be exchanged for an equal amount in principal of new securities in the offering.
The Company intends to use the net proceeds from this offering to retire the remaining balance of the 2008 Senior and Junior Convertible Notes due June 15, 2008 of approximately $10.8 million, to acquire access to Bayer-Schering's phase III "FIT" trial data to submit an sBLA application for label expansion of Zevalin in the US and for general working capital.
Rodman & Renshaw, LLC, a subsidiary of Rodman & Renshaw Capital Group, Inc. (NASDAQ: RODM), acted as the exclusive placement agent for the offering.
A prospectus supplement relating to the Preferred Stock and Convertible Notes to be issued in the offering will be filed with Securities and Exchange Commission. Copies of the prospectus supplement and accompanying base prospectus may be obtained directly from Cell Therapeutics, Inc., 501 Elliott Avenue West, Suite 400, Seattle, Washington 98119.
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.
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. The risks and uncertainties include that the Company may not achieve the milestone events contemplated for the additional investment described above; the Company may not be able to obtain access to the Bayer clinical data needed to file for additional label expansion for Zevalin; the investor may choose not exercise any of the warrants issued in the transaction; the Company continues to have a significant amount of debt outstanding and will need to raise additional capital to fund its operations as well as other risks listed or described from time to time in the Company's most recent filings on Forms 10-K, 8-K and 10-Q.
SOURCE Cell Therapeutics, Inc.