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Verenium says new conversion price of 8% notes could trigger wave of conversions
By Susanna Moon
Chicago, Feb. 27 - Verenium Corp. believes the conversion price on its 8% convertible senior notes due April 1, 2012 could reset to as low as $1.47 per share, prompting many holders of the notes to convert their notes, according to an 8-K filing with the Securities and Exchange Commission.
The conversion price of the notes was $4.09 per share as of the Feb. 25 filing date and is scheduled to reset on Friday.
The 8% notes also include a make-whole provision that requires the company to pay for conversions in cash or in common shares equal in value to the interest forgone over the life of the notes as a result of the conversion, discounted back to the date of conversion using the discounted rate on two-year Treasury notes and, if applicable, valuing the shares at a 5% discount to the applicable stock price at the time of conversion.
Verenium noted that its cash resources could be slashed if a large amount of the 8% notes were converted at the same time, and absent waivers from converting noteholders to take shares eligible for resale under Rule 144 rather than shares registered for resale in payment of the make-whole provision.
As a result, the company said it could default on its obligation to make any required cash make-whole payment under the 8% notes and the default could cause a default under Verenium's other outstanding debt and result in payments under its debt being accelerated.
The company's stock closed at $0.38 per share on Friday.
Based in San Diego, Verenium is a developer of specialty enzymes used in alternative fuel, industrial, health and nutrition processes.
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