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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December 18, 1998
DURAMED PHARMACEUTICALS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-15242 11-2590026
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
7155 East Kemper Road, Cincinnati, Ohio 45249 (513) 731-9900
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(Address and telephone number, including area code, of principal
executive offices)
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INFORMATION TO BE INCLUDED IN THE REPORT
Items 1, 2, 3, 4, 6 and 8 are not applicable and are omitted from this Report.
Item 5. Other Events
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The information set forth in the letter to stockholders
attached as Exhibit 99 is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(a) Financial Statements of Business Acquired.
Not Applicable
(b) Pro Forma Financial Information.
Not Applicable
(c) Exhibits.
The following exhibit is filed with this Report on
Form 8-K:
Regulation S-K
Exhibit No. Exhibit
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99 Letter to stockholders
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: December 18, 1998 DURAMED PHARMACEUTICALS, INC.
By /s/ Timothy J. Holt
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Timothy J. Holt
Senior Vice President-Finance and
Administration
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EXHIBIT 99
December 8, 1998
Dear Shareholder:
In February 1998, Duramed Pharmaceuticals, Inc. completed a private
placement to unrelated investors of $12 million of 5% Cumulative Convertible
Preferred Stock, Series F ("Series F Stock"). Funds from the placement were used
by Duramed for its product development and capital expenditure programs. The
Series F Stock is convertible into shares of Common Stock at a conversion price
which varies, depending upon the timing of conversions and the market price of
the Common Stock.
Under the rules of The Nasdaq Stock Market, on which Duramed's Common
Stock trades, shareholder approval is required for any transaction in which
shares of Common Stock may be issued at a discount from market in an aggregate
number exceeding 20% of the shares outstanding prior to the transaction.
Accordingly, the terms of the Series F Stock provide that a maximum of 3,580,252
shares of Common Stock (20% of the number outstanding when the Series F Stock
was issued) will be issued by Duramed upon conversion, with a provision for cash
redemption of any remaining unconverted shares of Series F Stock.
The shares of Series F Stock are fully convertible at this time.
Because of the market price of Duramed's Common Stock in October and early
November, if the holders of all of the shares of Series F Stock were to demand
conversion and redemption at this time, Duramed would be required to issue the
maximum number of shares of Common Stock and to make a cash redemption payment.
If the current market price continues, a cash redemption may not be needed;
however, if the market price of Duramed's Common Stock were to return to the
level experienced in October and early November, a cash redemption requirement
could be created once again.
Under the terms of the Series F Stock, Duramed has the option of
satisfying any required cash redemption payment by issuing additional shares of
Common Stock. The possibility exists that, during the period of time the Company
would be seeking shareholder approval for the issuance of additional shares in
satisfaction of the Series F Conversion, the Company's stock price could
increase. Under the terms of the Series F Stock, this would increase the amount
of the cash redemption liability and could put the Company in serious financial
jeopardy. To avoid this risk, Duramed has applied for and received an exception
to The Nasdaq Stock Market requirement for shareholder approval described above.
The exception would allow Duramed to issue up to 1,401,584 additional shares of
Common
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Stock in satisfaction of any cash redemption requirement for the Series F Stock.
The number of additional shares was determined based on the price of the
Company's stock on November 24, 1998. This exception was conditioned upon
approval by the Audit Committee of the Board of Directors of Duramed and also
upon Duramed sending notice to all of its shareholders alerting them to
Duramed's omission to seek the shareholder approval that would otherwise be
required in the absence of the exception. On November 13, 1998, the Audit
Committee of the Board of Directors of Duramed considered this matter and
expressly approved the Company's reliance on the exception from the shareholder
approval requirement.
At this time, it is not certain what number, if any, of additional
shares of Common Stock would be required, as their issuance is dependent on
future events, namely the stock price level during the conversion calculation
period at the time the Series F holder decides to convert. No cash redemption
may be required at all. If it is, depending upon Duramed's financial condition
at the time, it may be in Duramed's best interests to satisfy any cash
redemption by a cash payment. However, due to the Company's financial condition,
at this time the Company would not be in a position to fund a redemption event
and, considering that its inability to meet such funding requirement would
result in the Company being in default of the terms of the Series F Stock, the
Company sought the financial viability waiver from The Nasdaq Stock Market. The
earliest date upon which any of the additional shares might be issued would be
December 21, 1998.
Yours very truly,
DURAMED PHARMACEUTICALS, INC.
E. Thomas Arington
Chairman and Chief Executive Officer
