ICN Pharmaceuticals Acts to End Dividends

In a move aimed at saving more than $1.3 million a year in dividend payments, ICN Pharmaceuticals Inc. said it plans to redeem all 500,000 outstanding shares of its $2.70 cumulative convertible preferred stock on Sept. 5.

Dominic Luizzi, a spokesman for the Costa Mesa-based drug maker, said preferred holders can either sell their shares to the company at the market price before the redemption date, or convert the preferred stock into common shares. Luizzi said each preferred share will be exchanged for 2.078 shares of ICN common.

Holders who do nothing by the close of business on Sept. 5 will have their preferred stock redeemed at the original conversion price of $22.42 a share, including accrued dividends, Luizzi said. Based on Wednesday’s closing price of $37.50 a share, that would translate into a loss of $15.08 per share. Wednesday’s close was down $2.25 for the day.

“Basically, the company is looking for a way to rid itself of the dividend payment,” Luizzi said. Holders of the preferred shares receive $2.70 a year in dividends, while holders of ICN’s 9.6 million common shares receive none, he said.