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OTCPicks Featured Company: Merge Healthcare (MRGE) Enters into Securities Purchase Agreement with Merrick RIS, LLC

Merge Healthcare, Inc. (NASD: MRGE) announced that they have entered into a securities purchase agreement and additional agreements with Merrick RIS, LLC in the amount of $20 million through a private placement. Under the terms of the agreement, the company intends to sell a $15-million senior secured term note due 2010, plus 6,800,000 shares of the company’s common stock as partial consideration for the term note and 14,285,715 shares of the company’s common stock at a price per share of $0.35. The closing date for the private placement is on June 3, 2008, but that date may be altered upon closing conditions and the delivery of the shareholder notice.

Enclosed in the term note are various operating and financial covenants, including a requirement that the company have positive adjusted EBITDA for the last fiscal quarter of 2008 and cumulatively thereafter through the term of the note. Also enclosed are provisions in the event of default, including; failure to pay, breach of financial or operating covenants, and certain events of bankruptcy or insolvency. Merrick has been entitled to designate five persons to replace five of the eleven current directors on the company’s Board of Directors in connection with the private placement.

Merge Healthcare entered into an agreement in principle with the plaintiff in the consolidated securities class action suits filed against Merge Healthcare. The agreement issues a statement for the settlement announcing the release and dismissal of all claims against Merge and the individual defendants in the litigation. In exchange, Merge Healthcare has agreed to a cash payment of $3,025,000 paid in full to the plaintiff and Merge’s primary, and one of their excess D&O insurance carriers agreed to a cash payment of $12,975,000 paid in full to the plaintiff.

“We are pleased that Merrick has partnered with the company and provided this financing package. The financing should provide us with the necessary liquidity as we continue our attempts to grow our revenues and align expenses with the revenues of the business and regain our position as a growing and profitable provider of healthcare diagnostic imaging software and services,” commented CEO of Merge Healthcare, Mr. Rardin.

“This financing combined with the ongoing cost reduction plans that started with the February restructuring and the refocusing of the business on the North America RIS-PACS and teleradiology markets and the Cedara OEM business allows the company to focus on its core strengths. Additionally, we look forward to the strategic advice and counsel Merrick will provide to the Company as we move forward. The agreement in principle to settle the securities class action is another significant step forward for Merge Healthcare, especially when coupled with the previously announced agreement in principle to settle the Company’s derivative action. We are excited that we can now focus on the go forward strategy of Merge Healthcare,” he concluded.

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