Nightingale Informatix Announces Proposed $6.3 million Debt Refinancing and Private Placement Financings
/NOT FOR DISTRIBUTION IN THE UNITED STATES OR TO UNITED STATES NEWSWIRE SERVICES/
MARKHAM, ON, April 6 /CNW/ - Nightingale Informatix Corporation (TSX-V: NGH) ("Nightingale" or the "Company"), an application service provider (ASP) of electronic medical record (EMR) software and related services is pleased to announce that the Company is completing a comprehensive debt refinancing and concurrent private placement financings that lowers Nightingale's financing risk, reduces leverage, reduces interest costs, and offers more accommodating terms. The $6.3 million of funding will extinguish the Company's existing subordinated debt facility and provide additional working capital. The Company believes this will allow Nightingale to take advantage of the improving commercial opportunities in its marketplace. The transactions are subject to customary conditions, the completion of definitive documentation and the receipt of all necessary approvals of the TSX Venture Exchange.
Senior Loan Facility
Nightingale has executed a Senior Debt commitment letter with an arm's length commercial lending institution for a US$1,000,000 revolving line of credit and a US$2,000,000 term loan for aggregate proceeds of US$3,000,000 (collectively, the "Senior Loan Facility"). The Senior Loan Facility bears an interest rate of bank prime rate plus 3% which compares favourably to the Company's existing subordinated debt facility.
Common Share Offering
The Company proposes to issue up to 5,682,364 common shares of the Company at a price of $0.22 per Common Share for gross proceeds of up to $1,250,000 (the "Common Share Offering") and to concurrently issue subscription receipts ("Subscription Receipts") for gross proceeds of up to $2,074,000 (the "Subscription Receipt Offering"), all on a non-brokered private placement basis. The price of the Common Share Offering, which was arrived at through arm's length negotiations, represented a 5% discount from the 30 day volume weighted average trading price of the common shares on March 2, 2010, the date that the pricing was determined and represents a 19% discount from the 30 day volume weighted average trading price, established at the market close April 5, 2010. The Common Shares offered are subject to a 4 month statutory hold period and a 6 month contractual hold period from the date of issuance.
"Having achieved five consecutive quarters of positive EBITDA, recapitalizing our debt was an important objective that we had been working towards in order to further improve our cash flow and enhance our balance sheet," said Michael Ford, Chief Financial Officer. "This achievement is a positive endorsement of the Company from our new financial partners, and it provides us with a stronger financial base from which to drive the growth of the business."
Subscription Receipt/Convertible Debenture Offering
The Company intends to concurrently privately place 2,074 Subscription Receipts for gross proceeds of $2,074,000 on a non-brokered basis. Each Subscription Receipt will, following the satisfaction of the Escrow Release Conditions, entitle the holder thereof to receive, without payment of additional consideration, 12% convertible unsecured subordinated debentures of the Company (the "Debentures") with an aggregate principal amount equal to the aggregate subscription price of the holder's Subscription Receipts.
The Debentures shall mature three years following the date of issue of the Debentures ("Maturity"). The Debentures shall bear interest at 12% which shall be calculated and payable in cash monthly, in arrears, on the last business day of each month, commencing on the first business day of the month following the satisfaction of the Escrow Release Conditions. Following the first anniversary of issuance of the Debentures, the Company shall have the right to redeem the Debentures (a "Redemption") at any time, in whole or in part, on not more than 60 days and not less than 30 days prior notice at a price equal to their principal amount plus accrued and unpaid interest. The Debentures shall be convertible (a "Conversion") at the holder's option into fully-paid Common Shares ("Debenture Shares") at any time prior to Maturity or Redemption at a conversion price of $0.35 per Debenture Share. The conversion price represented a 52% premium to the 30 day volume weighted average trading price of the common shares on March 2, 2010, the date that the pricing was determined and represents a 29% premium to the 30 day volume weighted average trading price, established at the market close April 5, 2010. The Debentures, which shall not be listed on any market, shall have a 4 month statutory hold period and for insiders participating a 6 month contractual hold period, in each case, from the date of closing of the Subscription Receipt Offering.
The gross proceeds of the Subscription Receipt Offering will be held in escrow by a third party escrow agent (the "Escrowed Proceeds") and will be released to the Company only in conjunction with the repayment of the Company's existing subordinated debt facility in the amount of $5.25 million on July 30, 2010 (being the date upon which the Company's existing subordinated debt facility expressly provides for prepayment), or earlier, in accordance with the terms of such facility or on other terms acceptable to the Company (the "Escrow Release Conditions").
Pursuant to Multilateral Instrument 61-101 ("MI 61-101"), each of the Common Share Offering and the Subscription Receipt Offering is a "related party transaction" as David Banks, a Director of the Company, proposes to participate in the Common Share Offering and Sam Chebib, the Chief Executive Officer of the Company, John Bodolai, the Executive VP of the Company, Sven Grail and George Christodoulou, Directors of the Company, propose to participate in the Subscription Receipt Offering. David Banks, Sam Chebib, John Bodolai, Sven Grail and George Christodoulou currently hold 753,000, 11,018,183, 143,134, 4,781,408 and 4,707,408 Common Shares respectively, representing 1.1%, 15.6%, 0.2%, 6.8% and 6.7% of the issued and outstanding Common Shares, respectively. Upon completion of the Common Share Offering, David Banks will hold 1,889,364 Common Shares representing 2.5% of the issued and outstanding Common Shares. Assuming the full conversion of the Debentures, Sam Chebib, John Bodolai, Sven Grail and George Christodoulou will hold 12,446,754, 428,848, 5,138,551 and 5,064,551 Common Shares representing 15.2%, 0.5%, 6.3% and 6.2% of the issued and outstanding Common Shares, respectively. None of the aforementioned directors voted in connection with the approval of the Common Share Offering or the Subscription Receipt Offering.
The Company is exempt from the formal valuation requirement of MI 61-101 in connection with issuing the Common Shares, the Subscription Receipts and the Debentures in reliance on section 5.5(b) of MI 61-101 as no securities of the Company are listed or quoted for trading on the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the NASDAQ Stock market or a stock exchange outside of Canada and the United States. Additionally, the Company is exempt from obtaining minority shareholder approval in connection with issuing the Common Shares, Subscription Receipts and the Debentures in reliance on section 5.7(1) (a) as the fair market value of the Common Share and Subscription Receipt Offerings do not, as far as it involves the aforementioned parties, exceed 25% of the market capitalization of the Company.
Nightingale is one of the fastest growing health care service and software companies in North America and is recognized as an industry leader in Web-based clinician and community based electronic medical records (EMR) serving the needs of small primary care practices, multi-physician outpatient clinics, and large scale regional health organizations and networks. Coupled with integrated practice management, transcription and revenue cycle management, Nightingale's comprehensive service offering allows customers to enhance patient care, increase revenue opportunities and optimize operations. Nightingale is continuously innovating and enhancing its services to meet the needs of its growing and diverse customer base. Nightingale - Healthcare connected. www.nightingale.md
Forward Looking Statement
This press release contains "forward-looking statements" respecting the issuance and cancellation of securities of the Company within the meaning of applicable Canadian securities legislation. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may" ,"could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Nightingale to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the speculative nature of the medical software industry, which is affected by numerous factors beyond Nightingale's control; the ability of Nightingale to successfully integrate its acquisitions and any liabilities arising as a result of such acquisitions, access to capital and agreements with its Lenders; the existence of present and possible future government regulation; access to debt or equity financing and agreements with its Lenders; the significant and increasing competition that exists in the medical software industry; the early stage of Nightingale's business; and therefore it is subject to the risks associated with early stage companies, including uncertainty of revenues, markets and profitability and the need to raise additional funding. All material assumptions used in making forward-looking statements are based on management's knowledge of current business conditions and expectations of future business conditions and trends. Although management believes the assumptions used to make such statements are reasonable at this time, our assumptions may not to be as anticipated, estimated or intended. Certain material factors or assumptions applied by management in making forward-looking statements, include without limitation, factors and assumptions regarding Nightingale's continued ability to fund its business, rates of customer defaults, relationships with, and payments to, lenders, demand for Nightingale's products, as well as Nightingale's operating cost structure.
Although Nightingale has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Nightingale does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws. Further information on Nightingale Informatix Corporation is available at www.sedar.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
%SEDAR: 00022709EFor further information: Michael Ford, CFO, Nightingale Informatix Corporation, Tel: (905) 307-7870, email@example.com