A SIGNIFICANT DEVELOPMENT
Imatron to Acquire Majority Interest in Positron; Acquisition to Assist Positron's Re-entry into the Medical Imaging Market
HOUSTON--(BUSINESS WIRE)--May 5, 1998--Positron Corporation (OTC: POSI, POSIW) said today that it has entered into an agreement with Imatron Inc. (Nasdaq: IMAT) of South San Francisco, whereby Imatron will acquire a majority ownership of Positron. In conjunction with the execution of definitive agreements, Imatron will immediately begin making working capital advances to Positron up to $500,000 in order to enable it to meet a portion of its current obligations. The loan bears interest at 1/2% over the prime rate, is due March 1, 2000, and is secured by all of Positron's assets. As previously announced, Positron has been operating under severe liquidity and working capital constraints.
Under the terms of the agreement, Imatron will acquire a majority ownership of the outstanding common stock of Positron Corporation on a fully diluted and as-if-converted basis, excluding out-of-the-money warrants and options determined at the time of issuance of shares to Imatron. If such shares were issued today, Positron would be obligated to issue approximately 12 million shares of common stock to Imatron. Positron will receive a nominal cash amount from Imatron in payment for the shares. Under the planned arrangement, Positron will remain an independent public company.
Imatron, in addition to providing limited working capital financing, has agreed to support Positron's marketing program particularly with regard to Imatron's affiliate, Imatron Japan, Inc. by agreeing to take, after the date of closing, all reasonable efforts to cause the placement of 10 POSICAM (TM) PET cameras over the next three years. Positron recently shipped a POSICAM (TM) PET camera to Imatron Japan as the first delivery under a three-year distribution agreement entered into last year. Imatron Japan, an affiliate of Imatron, Inc., is a major distributor for Imatron's Ultrafast CT and several other high tech companies. Imatron has a 24 percent minority interest in Imatron Japan. Imatron will also help facilitate the recapitalization of Positron to support its re-entry into the medical imaging market by using its best efforts after the share issuance closing date to arrange for additional third-party equity financing for Positron over an eighteen month period in an aggregate amount of not less than $8,000,000.
Gary B. Wood, Ph.D., Chairman of Positron, said, "This agreement gives Positron the jump start it needs to move back to full operational capability. With Positron providing the ultimate cardiac functional test, the obvious synergy of the two companies' technologies provides a clinically effective algorithm for heart disease management and should support expanded joint opportunities to increase Imatron's and Positron's market share."
S. Lewis Meyer, Imatron President and CEO, said, "The increased acceptance of both Ultrafast CT and PET technologies by healthcare providers and payors opens up significant opportunities for complementary efforts between Imatron and Positron. A recent regulatory announcement on Positron's PET technology, which provides reimbursement for its specific applications in oncology, accompanied by its growing acceptance internationally, especially in Japan, provides both our companies with an opportunity for mutual benefit since Imatron can capitalize on its already established distribution network. We believe that our new relationship with Positron will enhance shareholder value for Imatron investors, as well as provide an attractive investment opportunity for new shareholders of Positron. Additionally, I believe that Imatron Japan, our affiliate company, will also benefit from this relationship by being able to expand its product offerings in Japan."
Consummation of the issuance of shares to Imatron is conditioned upon, among other things (a) the resignation of each officer of Positron, (b) the resignation of at least three of the four Positron directors and the appointment of Imatron's nominees to fill such vacancies, and (c) Positron shareholder approval of an amendment to Positron's Articles of Incorporation to increase its authorized common stock to 100,000,000 shares of common stock. Positron anticipates that the share issuance to Imatron will close in the third quarter of this year if such shareholder approval is obtained.
In connection with the transactions, Positron, Imatron and two current lenders to Positron, Uro-Tech, Ltd. and ProFutures Bridge Capital Fund, L.P., entered into certain agreements whereby (a) ProFutures waived all past defaults and extended the maturity of its loan (with a current balance of approximately $845,000) to October 5, 1998, in return for a $50,000 payment, the issuance of warrants to purchase 1,150,000 shares of Positron common stock at $0.25 per share (in addition to the issuance of previously bargained for warrants to purchase an additional 100,000 shares of Positron common stock at $0.25 per share), and minimum loan repayments of $50,000 for each of the months of April, May, June and July, 1998 and $100,000 for each of the months of August and September 1998, (b) Imatron agreed to subordinate its loan to ProFutures' loan, (c) Uro-Tech, Ltd. agreed to subordinate its loan (with a current balance of approximately $800,000) to Imatron's loan, and (d) ProFutures and Imatron agreed that all amounts above the first $1,000,000 of any third-party equity financing obtained by Imatron would be applied equally to reduce Positron's debt to both ProFutures and Imatron.
Positron Corporation designs, manufactures, markets, and services POSICAM(TM) PET systems, which are medical imaging devices utilizing positron emission tomography ("PET") technology. PET technology permits the measurement of the biological processes of organs and tissues, as well as producing anatomical and structural images. POSICAM(TM) systems are used by physicians in the diagnosis and management of heart disease and certain other neurological and oncological heart illnesses.
Imatron Inc. is primarily engaged in designing, manufacturing, marketing, and supporting Ultrafast CT(R) scanners based on the Company's proprietary scanning electron beam technology. Having achieved widespread recognition as the most sensitive tool available for the diagnosis of early stage heart disease, Imatron's Ultrafast CT scanner is now in use at major medical centers around the world, including The Mayo Clinic, University of Iowa, National Institutes of Health, UCLA, Stanford University, University of Illinois, The Royal Brompton Hospital in London, Tokyo University Hospital, Beijing Hospital and the National University Hospital of Singapore. Imatron's HeartScan Imaging Inc. subsidiary provides Coronary Artery Disease Risk Assessment diagnostic services in a nationwide network of clinics. -0- Except for the historical information contained herein, the matters discussed in this news release may contain forward-looking statements that are based on current expectations and estimates about the industries in which Imatron and Positron operate, the estimated impact of certain technological advances, the estimated impact of published research studies on sales and procedures, as well as management's beliefs and assumptions. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements. The factors that could cause actual results to differ materially include, among others: failed clinical demonstration of certain asserted technological advantages and diagnostic capabilities; reliance on product distributors; competition in the diagnostic imaging market; failure to improve product reliability or introduce new product models and enhancements; delays in production and difficulty in obtaining components and sub-assemblies from limited sources of supply; inability to meet cash-on-delivery or prepayment terms from vendors; determinations by regulatory and administrative government authorities; patent expiration and denial of patent applications; the high cost of the equipment as compared to other commercially available technologies; and the risk factors listed from time to time in the Company's Securities and Exchange Commission reports, including their reports on Form 10-K for their current fiscal year.
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CONTACT:
Imatron
S. Lewis Meyer/Gary Brooks, Lisa Kimberlin, 650/583-9964
or
Positron
Howard R. Baker, 281/492-7100
or
Sitrick And Company
Jeff Lloyd/Tony Knight
310/788-2850 |
