A Medical Device Daily
Paradigm Medical Industries (Salt Lake City) said it has completed the sale of $1.5 million in secured convertible notes, through Laidlaw & Co. (New York) and an institutional investor. The notes are to be purchased by the investors in three tranches of $500,000 each.
The company received the first tranche upon signing definitive investment agreements on Feb. 28. It will receive the second tranche upon the filing of a registration statement with the Securities and Exchange Commission and the third upon the effectiveness of the registration.
"Additional capital is needed at this point to provide the company will adequate funds to expand global sales and marketing programs, especially for the P60 Ultrasound BioMicroscope," said Paradigm Medical CEO Raymond Cannefax. "We now will have adequate funds to purchase additional inventory to satisfy expected strong customer demand for all of our products."
The notes are due three years after issuance and are secured by Paradigm Medical's assets, including inventory, accounts payable and intellectual property. The notes are convertible into shares of the company's common stock at any time during their term.
The conversion price is equal to the lesser of a) 2 cents a share or b) the average of the lowest intra-day trading prices during the 20 trading days immediately prior to the conversion date, discounted by 40%.
Interest on the notes is payable at 8% a year, payable quarterly in cash, with six months of interest payable up front. The notes are callable, with prepayment allowed at any time that the price of Paradigm Medical's stock is 10 cents a share or less.
The company also is required to issue warrants to the investors to acquire an aggregate of 12 million shares of common stock, at an exercise price of 10 cents a share. The warrants will have a five-year term from the date of issuance.
Paradigm Medical manufactures diagnostic equipment and consumable products.
In other financings-related news:
• Merge Technologies (Milwaukee), which does business as Merge Healthcare , said its board of directors has authorized the company to expand its stock repurchase program to a total of $20 million, from the prior authorization of $10 million. In addition, the company has eliminated the cap on the number of shares that may be purchased in any quarter.
The timing and amount of repurchases will be determined by the company, based on an evaluation of market conditions, applicable securities laws, compliance with loan covenants and other factors.
"This expanded stock repurchase program will enhance our ability to maximize shareholder value," said Richard Linden, president and CEO. "As of Dec. 31, we had a cash balance of approximately $64 million. Additionally, we have no outstanding debt, access to a $35 million line of credit, and we continue to produce positive cash flow. Given our strong financial position, we believe that this expanded stock repurchase plan contributes to our ability to build shareholder value, while maintaining sufficient resources to continue investing in our growth strategies."
Merge Healthcare is focused on the development and delivery of medical imaging and information management software and services.
• HealthSouth (Birmingham, Alabama) said that in connection with its previously announced tender offers for outstanding notes, it is extending the expiration time of the tender offers to 5 p.m. EST on March 6.
HealthSouth is one of the nation's largest providers of outpatient surgery, diagnostic imaging and rehabilitative healthcare services, operating facilities nationwide.