NORTH VANCOUVER, BC, June 11, 2012 /CNW/ - Open EC Technologies, Inc. ("Open EC" or the "Company") (TSX-V: OCE) is pleased to announce that it has entered into a letter agreement with QHR Technologies Inc. ("QHR") (TSX-V: QHR) pursuant to which QHR proposes to acquire all of the issued and outstanding securities of Open EC in a business combination effected by way of a Plan of Arrangement (the "Arrangement").
For Open EC this transaction, once completed, provides a strategic partner to accelerate our market share and earnings growth of our US HealthCare IT business with substantially improved access to capital and human resources. In addition, this plan of arrangement provides the Open EC shareholders with a choice of liquidity or to participate in ongoing equity growth potential with an exchange of Open EC shares for QHR Shares.
For QHR this transaction, once completed, provides QHR with a strategic opportunity to enter the US Healthcare market for their Electronic Medical Record (EMR) software through Open EC, who has depth of experience and a growing US Healthcare customer base in areas of medical billing, EDI & EMR data transfers to and from Healthcare Providers, Insurance Payors and Broker/Agencies throughout the United States.
Transaction Structure Summary
- Open EC Shareholder option to take either Cash or QHR Shares
- Cash option of $0.04 for each Open EC Share
- Share Exchange option of 12 Open EC Shares for 1 QHR Shares, with a 12 month hold on the shares
- Options & Warrants have a conversion rate as noted below to QHR Shares, with an 18 month hold
- $250,000 Working Capital Loan to Open EC on signing of this announced agreement
- Repayment of Open EC debt and an additional $500,000 of working capital for 2013
- Signing of the Definitive Agreement by July 15, 2012
- Closing of the Plan of Arrangement by October 31, 2012
Martyn Armstrong, CEO of Open EC states, "This strategic transaction with QHR will provide the Open EC shareholders a cash liquidity opportunity, or an opportunity to continue as shareholders in QHR. We believe the Open EC business growth opportunity will see a substantial benefit within the QHR group with improved balance sheet, access to working capital, human resources, sales and marketing for our US HealthCare expansion. With improved business development support to build the Open EC business, combined with QHR's market leading position in the Canadian Electronic Medical Records (EMR) software sector, our shareholders who elect a share exchange will be in the position to participate in the business growth of both QHR and Open EC. With the combined markets, solutions and management, both companies should benefit in growth in both the Canadian and US Healthcare IT Market."
Mr. Al Hildebrandt, CEO and President of QHR states, "QHR has been watching and analyzing the US Healthcare market for some time now, but we knew that it would be best for QHR if we could find a partner or an acquisition target who knew the complexities of the financial portion of Healthcare very well and already had a good portion of recurring revenue to fund the existing US business and augment that with QHR's own experiences and product offering. We are delighted to have found such a partner company and to find many new advanced software products and technology skills available to us in the highly qualified staff working at Open EC, especially for the development of the SaaS Healthcare market."
In the proposed Plan of Arrangement, holders of Open EC common shares ("Open EC Shares") can elect to exchange their Open EC Shares for common shares of QHR ("QHR Shares") at a ratio of twelve (12) Open EC Shares for each QHR Share or cash at a price of $0.04 per Open EC Share. Where no affirmative election is made, the Open EC shareholder will be deemed to have made the election to receive cash.
Holders of share purchase warrants and options which have not expired on the closing date may exchange their securities for QHR Shares at various rates depending on the class or series (some warrants will be exchanged at a ratio of three & three quarters to one, others at a ratio of nine to one and options will be exchanged at a ratio of ten to one). QHR Shares issued in exchange for Open EC Shares will be subject to a resale restriction for twelve months after the completion date, while QHR Shares issued in exchange for Open EC warrants and options will be subject to an eighteen month resale restriction.
The Arrangement will provide for the repayment of Open EC's existing secured debt over a period of time beginning on the completion date of the Arrangement and ending April 1, 2013 and a commitment to provide working capital of $500,000 to the Open EC business unit for calendar year 2013. In addition, within five business days of the date of the letter agreement, QHR has agreed to provide a secured bridge loan to Open EC in the amount of $250,000.
The Board of Directors of both companies have approved the letter agreement and the Arrangement but the Arrangement is subject to the negotiation and execution of a definitive agreement with comprehensive terms, as well as approval by the Supreme Court of British Columbia, the TSX Venture Exchange and the affirmative vote of 66 and 2/3 percent of the Open EC shareholders. The letter agreement requires that all of the officers and directors of Open EC will sign voting agreements pursuant to which they will agree to vote their securities in favour of the Arrangement.
The companies have agreed to work towards completing due diligence and the signing of a definitive agreement by July 15, 2012. The Transaction is expected to be completed by October 31, 2012, following all necessary approvals. The Transaction remains subject to entering into the definitive agreement and the satisfaction of customary closing conditions, including any necessary regulatory approvals. There is no assurance that the Transaction will be completed, or if completed, that the terms may change.
About QHR Technologies Inc.
QHR operates two business units in distinct markets:
The Electronic Medical Records ("EMR") division offers a suite of medical software modules that provides computer-based medical records for family physicians, medical specialists, and surgeons, as well as administrative modules for billing and patient scheduling, that is a key component of the move throughout Canada to provide electronic healthcare records for all Canadians. The EMR division also provides on-site and off-site (ASP) hosting capabilities.
The Enterprise Management Software ("EMS") division specializes in workforce management software, which consists of integrated payroll, staff scheduling and human resource software, and in customized financial management software built on the Microsoft Dynamics GP platform. These products are targeted at complex healthcare, social services and public safety environments.
Additional product and solution information for QHR Technologies is available on the web at www.QHRtechnologies.com. The QHR Technologies' common shares trade on the TSX Venture Exchange under the symbol: "QHR"
About Open EC Technologies, Inc.
Open EC Technologies is an e-Business Information Technology company with our corporate head office, marketing and development in Vancouver, BC, main HealthCare IT Solutions Operations office in San Antonio, Texas and Medical Practise Billing Operations office in Spring Hill, Florida. The company has software development and data center hosting operations in Maine, with Sales and Executive Management staff in Atlanta Georgia.
The Company's focus is to provide software solutions and transaction processing services to assist Physicians, Hospitals, Health Plans, Insurance Brokers and State Governments to exchange information for HIPAA EDI Health Plan Enrolment, Health Insurance Eligibility, Health Insurance Claims, Claim Payments and HealthCare Provider Collaboration of supporting patient referral and industry compliance/reporting documentation.
Additional product and solution information is available on the web at www.SoftCareHealthcare.com, www.iPlexus.net and www.softcare.com and additional public company information is available on the web at www.openec.com. The Company's common shares trade on the TSX Venture Exchange under the symbol: OCE.
ON BEHALF OF THE BOARD
"Martyn A. Armstrong"
Martyn A. Armstrong
President and CEO
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. This news release may contain forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.
For further information: