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Former Chairman Buys $7.8 Million in ICN Bonds

September 06, 2002|From Bloomberg News

ICN Pharmaceuticals Inc.'s former chairman, Milan Panic, is adding to his investment in the Costa Mesa drug company he founded, buying almost $8 million worth of its convertible bonds on the open market, a regulatory filing shows.

The 72-year-old executive, who founded ICN in a Los Angeles garage in 1959, resigned as chairman and chief executive in June after dissident shareholders won a proxy fight to gain control of the company's board. ICN shares have lost almost half their value since mid-July.

Panic bought the convertible subordinated notes with a face value totaling $7.8 million between Aug. 20 and Aug. 23, according to a filing with the Securities and Exchange Commission. The notes can be converted into 227,700 shares of ICN stock with a current market value of $2.3 million. He directly owns 1.04 million ICN shares, the filing said.

"I lost enormous money, but I have confidence the company is in very good shape," Panic said in an interview.

ICN shares plunged on July 11 after the new chief executive, Robert O'Leary, said excess inventory at wholesalers would have to be winnowed down, cutting revenue by as much as $12 million in each of the third and fourth quarters this year.

ICN shares rose 12 cents Thursday to $10.20 on the New York Stock Exchange.

The stock closed at $19.95 a share on July 10.

Panic is now buying bonds as an alternative way of betting on ICN's eventual recovery. He didn't disclose in the SEC filing how much he paid for the notes, which carry an interest rate of 6.5% and mature in 2008.

An investor who buys notes with a $1,000 face value at Wednesday's discount price of $680 would receive annual interest payments of $65, providing a yield of almost 10%. Panic said such a return was a big attraction for him.

"At my age, you have to worry about income," he said.

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