Thursday January 13, 2:48 pm Eastern Time
Company Press Release
ProMedCo Completes Initial Phase of Up to $120 Million in New Financing
FORT WORTH, Texas--(BW HealthWire)--Jan. 13, 2000--ProMedCo Management Company (Nasdaq/NM:PMCO - news) today announced that it has completed the first of two phases of a $55 million equity investment in the Company by an affiliate of Goldman, Sachs & Co. Under the terms of the transaction that closed today, the Company has received proceeds of $16 million, with receipt of the remaining $39 million contingent upon a number of conditions, including approval by a majority of the Company's stockholders and an expansion of the Company's bank credit facility of up to $65 million. The Company will use this capital infusion primarily to fund the continued expansion of its business.
H. Wayne Posey, ProMedCo's president and chief executive officer, said, ``We are very pleased with this vote of confidence from this leading financial institution and welcome the added strength the Goldman Sachs relationship will bring to our company. This investment will enable ProMedCo to continue its growth strategy through prudent acquisitions at a time when there is little competition.'
The equity investment will take the form of a new issue of the Company's 6% Series A Convertible Preferred Stock, convertible into common stock at $3.25 per share and carrying full voting rights with the common stock as though it had been converted. Upon conversion, the holders of the preferred stock will hold approximately 40% of the Company's common stock on a fully diluted basis. The initial $16 million portion of the investment made today consisted of the purchase of the Company's subordinated notes along with 1.25 million shares of common stock. At closing of the second phase of the investment, the subordinated notes, common stock, and $39 million in cash will be exchanged for the $55 million of preferred stock. The Company has begun negotiations with its lending banks for an expansion of its credit facility of up to $65 million and expects to conclude the second phase of the financing during the first quarter of 2000.
Mr. Sanjeev Mehra, a managing director of the Merchant Banking Division of Goldman Sachs, will join the Company's Board of Directors and Executive Committee following the closing, and two additional Goldman Sachs nominees will be appointed to the Board, which is being expanded to 10 members, concurrently with the closing of the second phase of the transaction.
Mr. Mehra said, ``We are excited about our partnership with ProMedCo and its management team. The Company has developed a highly differentiated and focused strategy in non-urban markets, and management has successfully executed this strategy by adding value to acquired practices.'
Mr. Posey added, ``This transaction resulted from a thorough review of various alternatives aimed at ensuring the continued growth of our company and long-term benefit to our stockholders. We are confident that we have found the right fit, and we look forward to working with Goldman Sachs to achieve the Company's full potential.'
This press release contains ``forward-looking statements' which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on current expectations and may be significantly impacted by certain risks and uncertainties described herein and in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1998. There can be no assurance that statements made in this press release relating to future events will be achieved.
ProMedCo, headquartered in Fort Worth, Texas, is a medical services company that coordinates and manages the delivery of a wide variety of healthcare services in non-urban communities. ProMedCo believes that these non-urban communities, which have fewer healthcare providers and lower HMO penetration than urban areas, offer an opportunity for the Company to capture a substantial portion of local healthcare revenues. By affiliating with leading medical groups, the Company establishes a platform from which it can consolidate the delivery of local healthcare services. ProMedCo then expands this platform by adding ancillary services, physicians and mid-level providers, thus increasing its share of local healthcare revenues. |
