ICN’s Panic to Exercise Options and Sell Shares in Order to Pay Taxes

Milan Panic, the beleaguered chairman of ICN Pharmaceuticals Inc., plans to exercise stock options worth $3.4 million and sell nearly 129,000 shares to pay taxes and related expenses, the company announced Tuesday.

The options, which Panic received as long as 10 years ago, come due in six weeks at an exercise price of $3.75 a share--less than one-sixth of the stock’s present value, according to David Watt, the company’s general counsel.

The drug company’s stock closed in New York Stock Exchange trading Tuesday at $26.125 a share, unchanged.

Watt estimated that Panic would pocket $1.8 million from the stock sale and use the proceeds for taxes and related expenses.

Analysts speculated that Panic would use the money to pay $950,000 in back taxes and penalties to settle an earlier debt with the Internal Revenue Service. Panic and his wife, Sally, are disputing the IRS claim in U.S. Tax Court.

However, Watt discounted analysts’ speculation, emphasizing that he believes the money will be used to satisfy current taxes.

Panic, who is traveling in Europe, couldn’t be reached for comment. His exercise of the options represents about 11% of the 1.2 million total options he holds.

Analyst Bob Back said Panic’s exercise of the options makes sense for the chairman because the options would become worthless upon expiring.

Watt noted that Panic has often sold shares in the past for personal financial and tax-planning purposes. In fact, Panic now faces a federal investigation and litigation involving his alleged insider sales of $1.24 million worth of company stock in 1994.

Company sources say the sale stemmed from Panic’s attempt to pay a financial judgment associated with his troubled personal investments in San Diego hotels.

Panic has denied wrongdoing.