A Diagnostics & Imaging Week

HealthSouth (Birmingham, Alabama) reported that it has amended its existing bank credit facility. The amended and restated credit facility, which provides for a $315 million term loan, a $250 million revolving line of credit and $150 million in letter of credit facilities, cures all defaults of the company's outstanding indebtedness, it said.

Healthsouth CFO John Workman said the financing "provides us with financial flexibility that the company has not had over the past 18 months and the liquidity to satisfy future obligations. The substantial interest from the investment community allowed us to gain more competitive pricing, reducing our annual fees by almost $1 million."

"Beginning with the resolution last summer of the bondholder litigation and continuing with the recent CMS/DoJ Civil settlement, the resolution of this final technical default is another significant step in working through the fraud-related issues unique to the company," said Jay Grinney, HealthSouth's president and CEO.

JP Morgan Securities and Wachovia Capital Markets were co-lead arrangers and joint bookrunners and Deutsche Bank Securities served as arranger for the amended and restated credit facility.

HealthSouth is a major outpatient surgery, diagnostic imaging and rehabilitative healthcare provider.

Radiation Therapy Services (RTS; Fort Myers, Florida), an operator of radiation therapy centers, also has amended its credit facility.

The company's $25 million term loan has been expanded to $35 million and its $80 million revolving credit commitment has been expanded to $140 million.

Per the amendment, the interest rate spreads on the term loan and on the revolver were reduced overall by 25 basis points. Current availability under the amended agreement has increased from $48.9 million to $120.6 million. The maturity date for the credit facility is March 15, 2010.

Two new banks were added to the banking syndicate, bringing the total number of banks to eight. The two new banks Carolina First Bank and International Bank of Miami join the ongoing participants Bank of America, Wachovia Bank, Fifth Third Bank, SunTrust Bank, Regions Bank and National City Bank.

Positron (Houston), a manufacturer of positron emission tomography (PET) scanners, reported receiving the final installment of funds from the sale of $2 million worth of 10% convertible promissory notes to Canada-based Imaging Diagnostic Centres, a private company engaged in the development of PET centers.

Positron said that the proceeds from the notes were used to build a sales and marketing team and support past and current working capital needs.

Positron also reported that it has reached an agreement with an institutional investor to provide it, in installments, an additional $1 million through the purchase of secured notes convertible into a new series of convertible preferred stock. The convertible preferred stock will be convertible into 22 million shares of the company's common stock.

The proceeds, Positron said, will be used in the development of a series of new PET and PET/CT scanners and general corporate purposes.

Positron manufactures and supports medical imaging systems using PET technology under the trade name Posi-cam systems, which incorporate technology for the diagnosis and treatment of patients in the areas of oncology, cardiology and neurology.

Positron reports Posicam systems in use at medical facilities, including the University of Texas-Houston Health Science Center; the Coronary Disease Reversal Center (Buffalo, New York); Emory Crawford Long Hospital-Carlyle Fraser Heart Center (Atlanta) and Nishidai Clinic (Tokyo).

In other financing news:

Inverness Medical Innovations (Waltham, Massachusetts) extended the expiration of its exchange offer from midnight March 18 to 11:59 p.m. EST yesterday. The company's 8-3/4% senior subordinated notes, due 2012, are offered for exchange for the $150 million of outstanding 8-3/4% senior subordinated notes, due 2012, issued Feb. 10, 2004.

As of March 16, about $90.08 million of the old notes (roughly 60%) had been tendered. The exchange offer has been extended to allow more time for the holders of the remaining $59.92 million of old notes to participate in the offer, Inverness said.

Inverness develops diagnostic devices and says it is exploring opportunities for its electrochemical and other technologies in several diagnostic and consumer-oriented uses, with a focus on women's health, cardiology and infectious disease.

Akers Biosciences (Thorofare, New Jersey) reported receiving $2.5 million, the principal amount of promissory notes convertible into shares of the company's common stock. Akers said it will use the funds to expand its production facilities and sales force and as working capital following what it called "positive market response" to its products, in particular the heparin/platelet factor-4 antibody test.

The promissory notes were issued by an investment group led by Platinum Partners Value Arbitrage Fund, with Dunwoody Brokerage Services as the placement agent. The notes, which have an 18-month maturity from the date of the agreement, bear simple interest accruing at the annual rate of 6%, and may be repaid by the company or converted into its common stock under certain conditions.

In addition, the company issued to the investors two different classes of warrants to purchase additional shares of the company's stock. The Class A common stock warrants, which have a life of one year and an exercise price determined by the then current market price, entitle the investors to purchase the same number of shares to which they are entitled under the promissory notes, assuming the complete conversion of the notes issued on the closing date. The company also has issued four Class B warrants, which have a life of five years and an exercise price of $1.49 per common stock, for each 10 shares, which the investors would be entitled to, assuming the complete conversion of the notes on the closing date.

"We are delighted to have attracted additional capital into our company at this important stage in our development which significantly strengthens our financial position. Furthermore, the warrants associated with the investment can provide additional expansion capital in the future," said Ray Akers, company CEO. "We have recently secured a string of distribution agreements, including one with Oryx Pharmaceuticals [Mississauga, Ontario] to penetrate Canada with our heparin/platelet factor 4 antibody test, and Alco Industries [Valley Forge, Pennsylvania] to penetrate U.S. retail markets ... [W]e require funds to facilitate the expansion of our production facilities in order to achieve our aggressive sales targets."

Akers develops point-of-care screening and testing products.

DaVita (El Segundo, California) reported that it has priced $500 million aggregate principal amount of its 6-5/8% senior notes, due 2013, and $850 million aggregate principal amount of its 7-1/4% senior subordinated notes, due 2015, in a private placement. The offering is expected to close on or about March 22.

The company said it expects to use the net proceeds, along with available cash, to repay all outstanding amounts under the term loan portion of its senior secured credit facilities.