Merge Healthcare, a medical imaging software and services provider, has entered into a securities purchase agreement and related agreements with Merrick RIS for $20 million in financing through a private placement.
Pursuant to the terms of the private placement, Merge said it intends to sell a $15 million senior secured-term note, which would be due 2010, 6.8 million shares of its common stock as partial consideration for the term note, as well as approximately 14 million shares of its common stock at a price per share of $.35.
The private placement is scheduled to close on or about June 3, subject to customary closing conditions and the delivery of the shareholder notice, according to the Milwaukee-based Merge. After giving effect to the payment of certain transactions costs, the company said the closing fees, the payment of prepaid interest and the net proceeds of the private placement to it will equal approximately $16.6 million.
The term note will bear interest at 13 percent per year, payable quarterly; and Merge said it is required to prepay at the closing the first two interest payments.
In connection with the private placement, Merrick shall be entitled to designate five persons to replace five of the 11 current directors on Merge’s board of directors, effective immediately upon the closing of the private placement. The company said it has also agreed that Merrick will continue to have the right to designate five persons to be nominated for election to the board of directors in the future, subject to reduction upon a decrease in Merrick’s ownership percentage in the company.