Company Stock Begins Trading on OTCBB LEXINGTON, Mass., Dec. 28 /PRNewswire-FirstCall/ -- MacroChem Corporation (OTC:MCHM.OB) (BULLETIN BOARD: MCHM.OB) , announced today that it has raised $2.5 million in gross proceeds from a private placement of its securities to two institutional investors, SCO Capital Partners LLC and Lake End Capital LLC. In this private placement, MacroChem issued 250 shares of Series C Cumulative Convertible Preferred Stock and six-year warrants to purchase 100,000,000 shares of the Company's common stock at an exercise price of $0.03 per share. The Series C Preferred Stock has a liquidation value of $10,000 per share and is entitled to a dividend of 10% per annum, payable in shares of MacroChem common stock at the Company's option. The Series C Preferred Stock acquired by the investors is convertible into 100,000,000 shares of common stock and the holders of the Series C Preferred Stock vote on an as-converted basis with the holders of MacroChem common stock, and therefore hold approximately 70.5% of the voting power of the Company's outstanding securities. Assuming the conversion of all of their shares of Series C Convertible Preferred Stock, the investors would hold approximately 70.5% of the outstanding common stock of the Company. Assuming both the conversion of the Series C Preferred Stock and the exercise of all of the warrants acquired by the investors, the investors would hold approximately 83% of the outstanding common stock of the Company. Consequently, the investors have acquired control of the Company. "This private placement gives our Company the opportunity to maintain limited operations while we reprioritize our technologies, redirect our strategic focus and consider strategic alternatives for our products and technologies," stated Robert J. DeLuccia, President and Chief Executive Officer of MacroChem. As part of this private placement, the Company has agreed to effect, by January 2, 2006, a 1 for 7 reverse stock split of its common stock approved by the Company's stockholders at its Annual Meeting of Stockholders on June 14, 2005. In addition, MacroChem also agreed to effect an additional 1 for 6 reverse split of its common stock as promptly as practicable. The investors have submitted written consents approving this 1 for 6 stock split, which is expected to become effective 20 days after the Company sends an information statement to its stockholders. Under the terms of the Purchase Agreement executed in connection with the private placement, for as long as at least 20% of the shares of Series C Preferred Stock issued remain outstanding, SCO Capital Partners LLC has the right to designate two individuals to serve on MacroChem's board of directors. The Purchase Agreement prohibits the Company from taking certain actions without the approval of a majority of its board of directors, which majority must include at least one of the SCO director designees, until the earlier of March 31, 2006 and additional closings under the Purchase Agreement in which the Company receives gross proceeds of at least $3.5 million. On September 1, 2005, MacroChem had announced that it was discontinuing its research and development activities and was seeking to sell its business. The funds raised in this private placement will allow the Company to maintain limited operations and evaluate strategic alternatives for its business. There can be no assurance, however, that there will be any additional closings under the Purchase Agreement or that the Company will be able to raise any additional capital. Until the Company is able to raise additional capital, if at all, its operations will be significantly limited. SCO Securities LLC, an affiliate of SCO Capital Partners LLC, acted as placement agent in connection with the private placement. The securities offered and sold to the investors in the private placement have not been registered under the Securities Act of 1933, as amended (the "Securities Act") and were sold in reliance upon the exemption from securities registration afforded by Regulation D under the Securities Act. This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state. MacroChem Begins Trading on Over-The-Counter Bulletin Board On December 22, 2005, MacroChem's common stock began trading on the Over- The-Counter Market on the NASD Electronic Bulletin Board (OTCBB) under the symbol "MCHM.OB." The OTCBB is a regulated quotation service that displays real-time quotes, last-sale prices and volume information in over-the-counter (OTC) equity securities. OTCBB securities are traded by a community of market makers that enter quotes and trade reports. Quotations and trading information can still be accessed via websites such as Yahoo! and other quotation services or through a securities broker. Forward-Looking Statements With the exception of historical information contained in this press release, the matters described herein are forward-looking statements that involve risks and uncertainties. MacroChem's actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed or referred to in the section entitled "Risk Factors" in MacroChem's Annual Report on Form 10-K, as well as those discussed elsewhere therein, and include, without limitation, risks regarding product development, the timing and results of clinical trials, the regulatory approval process, capital requirements, financial condition, patent protection and dependence on third parties for development and licensing arrangements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. MacroChem undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. For more information visit our website, http://www.macrochem.com/ DATASOURCE: MacroChem Corporation CONTACT: Bernard Patriacca - VP/CFO of MacroChem Corporation, +1-781-862-4003 Web site: http://www.macrochem.com/

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