Albany Molecular Research, Inc. announced that it has exercised its conversion option with respect to $15 million of Organichem Corporation subordinated debentures. The conversion into additional shares of Organichem common stock took effect on January 1, 2003, and increases AMRI's ownership in Organichem from 39.2% to 75%.
"The debenture conversion is a step towards AMRI's ultimate purchase of Organichem, which we expect to occur within the next few months," said AMRI Chairman and Chief Executive Officer Thomas E. D'Ambra, Ph.D. "Ownership of Organichem will provide AMRI customers with a one-stop, continuous range of resources from bench-scale synthesis to commercial cGMP manufacturing."
Organichem Corporation was founded in 1999 through a management led buyout of the Nycomed Amersham plc chemical manufacturing facility in Rensselaer, New York. AMRI was a founding investor in the formation of Organichem which was announced on December 21, 1999. AMRI's investment in Organichem included a $15 million equity investment for a 37.5% ownership and $15 million in debentures, which could be converted into additional equity in Organichem after three years.
The December 1999 investment agreement with Organichem also gave AMRI the option to purchase the remaining Organichem shares subsequent to the completion of Organichem's 2002 audited financial statements. AMRI has previously communicated its intention to exercise the purchase option. The purchase price is to be determined based on Organichem's financial performance in the year 2002. At this time, it is estimated that the purchase price will be approximately $30 million.
AMRI will begin consolidating Organichem's operating results effective January 1, 2003. In its previous status as a minority shareholder, AMRI only included its proportionate share of Organichem's net income in its income statement as equity in income of unconsolidated affiliates.