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news release:
VSM announces
multi-faceted $20 million financing agreement with Mass Financial
Vancouver, BC, June 7: VSM MedTech Ltd. (TSX:
VSM), the
world leader in the emerging clinical market for magnetoencephalography ("MEG"),
announced it has signed a multi-faceted $20 million financing agreement
("Agreement") with Mass Financial Corp. ("Mass") of Barbados, an experienced
international merchant bank with diverse global business relationships. As part
of the Agreement, VSM received $ 1.5 million in interim bridge financing today.
"This arrangement will provide comprehensive financing for both VSM's short and
long-term requirements, and will enable us to dramatically expand our global
marketing capabilities" said Jack Price, VSM's President and Chief Executive
Officer. "It provides the stability demanded by our customers, as well as the
capital required for further product enhancements as we address the clinical
evolution of the MEG market."
The Agreement calls for the private placement of $5 million of units of VSM to
be guaranteed by Mass, as well as a $15 million revolving line of credit that
would also be convertible into units. Each private placement unit will consist
of one common share and one share purchase warrant to purchase an additional
share having a three year term. The line of credit, or any portion thereof,
would be convertible by Mass into units of VSM for a period of 62 months, each
unit consisting of one common share and one share purchase warrant. Final
completion of the Agreement is subject to further due diligence by Mass.
Transactions involving the issue or conversion to VSM common shares will be
based on VSM's net tangible asset value at May 31, 2006, which will be
independently determined. VSM currently has 43.6 million shares outstanding.
VSM shareholders will be given an opportunity to approve the Agreement at a
special meeting to be held in July. If the proposed financing is approved by
shareholders, formal closing will take place by July 31, 2006. With the approval
of this transaction, VSM will be superbly positioned to capitalize on the
potential growth of the MEG technology for clinical applications. VSM has also
agreed to pay a break-up fee of $1.5 million to Mass should it elect to enter
into an alternative financing transaction within 12 months.
Mass’s global experience in the financing of capital equipment, and in
particular medical equipment, will also provide a key competitive advantage for
VSM as the agreement contemplates development of an equipment financing package
for new customers. Mass is especially committed to supporting VSM’s marketing
activities in China, India, Russia, and Korea.
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