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DeCode Sells Auction Rate Securities to Bank

NEW YORK (GenomeWeb News) – DeCode Genetics said after the close of the market on Tuesday that it had sold to Icelandic bank NBI its auction rate securities for a price of $11 million.

Under terms of the sale, DeCode has a call option to require NBI to sell the securities back to the firm at any time prior to Dec. 31, 2009, while NBI has a put option to require DeCode to repurchase the securities following the sale of certain other DeCode assets, or if not previously repurchased, on Dec. 31, 2009.

Reykjavik, Iceland-based DeCode took a $7.7 million charge in its fourth quarter of 2007 related to impairment of its auction rate securities. At the time, CEO Kari Stefansson said, "Obviously, we are not happy with the illiquidity of the auction rate securities. However, we are taking the appropriate measures in an attempt to recover the money invested in them."

The firm also said in the statement that it was continuing to reduce expenses while evaluating "strategic alternatives, including corporate partnerships and the sale of assets. DeCode believes that the proceeds from the sale of the auction rate securities will be sufficient to sustain operations into the second quarter, enabling the company to complete its strategic review and to pursue the best opportunities emerging from this process without seeking additional financing."

NBI is a state-run bank that was formed in October 2008 to take over the insolvent Landsbanki, which was formerly one of Iceland's biggest banks.

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