Dendreon's Debt Problem: Mulls Wiping Out Shareholders
Dendreon (NASDAQ: DNDN) warned investors of a "significant risk" that it will be unable to repay or refinance $620 million in notes due in January 2016.
"We are considering alternatives that could result in leaving our current stockholders with little or no financial ownership of Dendreon," the company said in a filing Monday with the Securities and Exchange Commission.
Dendreon shares plunged more than 22 percent in pre-market trading to $1.65 per share.
Dendreon, which sells a prostate cancer drug called Provenge, said its board will also "consider alternatives that might be presented by third parties, but there can be no guarantee that any such alternative will provide value" for shareholders.
The debt consists of convertible notes with an effective conversion price of $51.24 per share. With Dendreon's stock price well below that level it's "unlikely that the holders will exercise their conversion rights," the company said.
The company has been working with advisers on alternatives for a possible balance sheet and has so far paid advisers $6.8 million in 2014.
Dendreon's $136.7 million in cash and investments plus sales of Provenge is sufficient to fund operations for "at least the next 12 months," but added that it's unlikely to become a profitable company before the 2016 notes become due.
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