A Diagnostics & Imaging Week
Quest Diagnostics (Madison, New Jersey) said it has commenced a cash tender offer to buy up to $200 million aggregate principal amount of its 5.125% senior notes due 2010 and 7.50% senior notes due 2011. The terms and conditions of the tender offer are described in the offer to purchase dated May 19 and related letter of transmittal, Quest said.
The tender offer will expire at midnight EDT June 16, unless extended. Holders of notes who validly tender and do not validly withdraw their notes at or prior to 5 p.m. EDT on June 2 will receive the total tender offer consideration, which includes an early tender premium of $30 per $1,000 in principal amount of notes tendered and validly accepted. Holders of notes who validly tender their notes after the early tender date and at or before midnight EDT on the expiration date will be eligible to receive only the late tender offer consideration per $1,000 principal amount of notes tendered by such holders that are accepted for purchase, which is equal to the applicable total tender offer consideration minus the early tender premium.
Settlement of the tender offer is expected to occur on the second business day following the expiration date.
Quest has retained Banc of America Securities as lead dealer manager and Calyon Securities and Mitsubishi UFJ Securities as co-dealer managers. Global Bondholder Services has been retained to serve as the depositary and to serve as the information agent for the tender offer.
In other financings, Cancer diagnostic test provider Clarient (Aliso Viejo, California) reported that it has completed the second tranche of a private placement of convertible preferred stock with Oak Investment Partners (Westport, Connecticut) a multi-stage venture capital firm.
The second tranche for nearly $10.9 million, combined with $29.1 million in proceeds from the first tranche that closed March 26, 2009, will retire $31 million in Clarient borrowings and bolster working capital.
"As we stated in the initial financing announcement, this transaction strengthens Clarient's financials, streamlining our balance sheet and moving us tangibly closer to our goal of sustainable profitability," said Ron Andrews, vice chairman/CEO. "Oak is an excellent strategic partner with deep expertise in life sciences that will help Clarient continue its robust growth and expand our share of the dynamic cancer-diagnostic services market."
Clarient said it intends to retire a $10 million mezzanine debt facility from Safeguard Delaware, a wholly owned subsidiary of Safeguard Scientifics (both; Wayne Pennsylvania) a provider of growth capital for entrepreneurial and innovative technology and life sciences companies. The mezzanine debt would have matured Feb. 28, 2010. In addition, the facility carries an annual interest rate of 14% and would have required the issuance of a substantial number of warrants beginning June 1 if it were not terminated before that date.
The purchase price of the Clarient Series A convertible preferred stock was $7.60 per share, which equates to an effective purchase price of $1.90 per share of underlying common stock or about market price at the date the financing was agreed upon. Under terms of the private placement, Oak may convert at any time one convertible preferred share into four shares of Clarient common stock. After one year, preferred shares, which do not accrue dividends, convert automatically into common shares if Clarient shares trade above $4.75 per share for 20 days of a 30 consecutive trading-day period.
After four years, Clarient may redeem any unconverted preferred shares at $7.60 per share plus any undeclared but unpaid dividends. Upon mutual agreement after the closing of the second tranche, Oak may purchase up to an additional $10 million of Clarient preferred shares, providing the company access to capital for strategic opportunities that would accelerate the company's growth.
The private placement gives Oak effective control of nearly 21% of Clarient's outstanding shares and reduces Safeguard's position to nearly 47% from nearly 62% at December 31, 2008. With certain exceptions, preferred shares will be voted with common shares on an as-converted basis. Safeguard first took an ownership stake in Clarient in 1996, increasing its position over time.