A Diagnostics & Imaging Week

Franklin & Seidelmann Subspecialty Radiology (F&S; Cleveland) reported that it will receive a $25 million investment from Oak Investment Partners.

The company said the investment will be used to expand its product offerings, improve its client support services, enhance its technology platform and expand its workforce to support its growing client base, subspecialty radiology team and case volume.

F&S provides imaging centers, physician practices, radiology groups and hospitals around the country with subspecialty teleradiology services as a cost-effective strategy to access a comprehensive network of subspecialty radiologists on a full-time or as-needed basis.

"This investment will enable us to support our growing report volumes, accelerate our technology infrastructure spending plans, and maintain our focus on delivering high quality, proactive services to clients," said F&S co- founder Dr. Frank Seidelmann.

F&S also reported that Ann Lamont, a managing partner at Oak Investment Partners, will join its board of directors.

Quest Diagnostics (Lyndhurst, New Jersey) reported that it intends to offer $800 million in two series of senior notes, in a public offering made under a shelf registration statement filed with the SEC.

The company said it expects the offering to be completed before the end of the month, with net proceeds to be used, together with cash on hand, to repay all borrowings under the bridge loan facility incurred to pay a portion of the purchase price and transaction expenses of the previously disclosed $2 billion acquisition of AmeriPath (Palm Beach Gardens, Florida).

Quest also reported that it has completed its cash tender offer for the outstanding $350 million, 10-1/2% senior subordinated notes due 2013.

As of the expiration date, about $348 million in aggregate principal amount, or 99.4% of the $350 million outstanding notes had been validly tendered and not withdrawn.

The total consideration, which is payable to holders who tendered their notes at or prior to June 4 (the consent deadline), was $1,088.58 for each $1,000 principal amount of notes, while the tender offer consideration, which is payable to holders who tendered their notes after the consent deadline, was $1,058.58 for each $1,000 principal amount of notes validly tendered and not withdrawn prior to the expiration date.

In other financing news:

• Aspect Medical Systems (Norwood, Massachusetts) reported that it has priced its previously disclosed private placement of $110 million principal amount of 2.5% convertible senior notes, due 2014, to qualified institutional buyers.

Aspect has granted the initial purchaser of the notes an option to purchase up to an additional $15 million principal amount of notes.

The notes will pay interest semi-annually at a rate of 2.5% per annum. The notes will be convertible under certain circumstances into shares of Aspect Medical's common stock at an initial conversion rate of 52.4294 shares per $1,000 principal amount of notes.

This is equivalent to an initial conversion price of $19.07 per share, which represents a conversion premium of about 22.5% based on the closing price of $15.57 of Aspect Medical's common stock on June 14 on the NASDAQ Global Market.

The sale of the notes is expected to close on June 20, subject to customary closing conditions.

Aspect said it expects to use a portion of the net proceeds from the offering to repurchase about 2 million additional shares of its common stock from Boston Scientific (Natick, Massachusetts) upon exercise of a portion of its option to purchase shares of its common stock held by Boston Scientific.

This option was granted by Boston Scientific in connection with the previously reported termination and repurchase agreement that Aspect Medical entered into with Boston Scientific last week.

Aspect already repurchased 2 million shares of its common stock from Boston Scientific on June 13 under the termination and repurchase agreement, leaving Boston Scientific with 4,013,239 shares of Aspect Medical common stock.

The company has the right to purchase the 4 million remaining shares of its common stock held by Boston Scientific at a purchase price per share equal to the greater of $15 and the average of the closing prices of Aspect Medical's common stock as reported on the NASDAQ Global Market for the 10 consecutive trading days up to and including the date of the exercise of such option by the company.

Assuming Aspect purchases the option shares at a purchase price of $15.57 per share, which was the closing price of Aspect's common stock on June 14, it would use about $31.1 million of the net proceeds of the offering to purchase such shares.

In addition, the company plans to use a portion of the proceeds from the offering to purchase up to an additional 1 million shares of its common stock in private transactions concurrently with this offering. It intends to use the remaining net proceeds for general corporate purposes which may include purchases of the balance of the shares of its common stock owned by Boston Scientific, investments in its neuroscience program and acquiring, licensing or investing in complementary businesses, technologies or products.