$110M placing by Cell Genesys

Cell Genesys of the USA has announced the pricing of its offering of $110 million principal amount of 3.125% convertible senior notes due 2011 through a private placement to qualified institutional buyers. The notes will be convertible into Cell Genesys common stock at a price of $9.10 each. The initial conversion price represents a premium of approximately 30% relative to the reported last sale price of Cell Genesys common stock on the USA's Nasdaq market of $7.00 per share on October 14. The sale of the notes is expected to close on October 20.

The company has also granted the initial purchasers of the notes a 30-day option to buy up to an additional $35 million principal amount of the notes.

Cell Genesys intends to use the net proceeds from the offering primarily to repay two outstanding bank loans totaling $95 million, thereby eliminating existing restrictions on approximately $60 million of its current cash balance.