Notes on financing alternatives

Smaller follow-on offerings are a by-product of soft equity markets. But last week's $50 million convertible note deal by Hybridon should serve as a reminder that big money can still be found in down markets (details, B13). Such deals make an end-run around a poor equity market by setting up structures that in effect sell stock at a future date.

HYBN's notes are convertible into HYBN common at $7.0125. If all the notes convert, HYBN would issue 7.1 million shares on top of the existing 25.1 million shares outstanding, giving the noteholders 22 percent of the antisense company.

E. Andrews Grinstead, chairman and CEO, estimated that the note deal enabled the company to raise about twice as much as it would have done through a straight equity deal

Although investors lopped 6 percent off HYBN's stock after the offering was announced on Thursday (the shares closed at $6), note deals can lessen the 10-20 percent

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