Paramount Acquisition (stock symbol: PMQC), which raised $58.65 million when it went public on August 3, 2005, has announced that it is acquiring Chem Rx, a "long-term care pharmacy based in Long Beach, New York."
On January 27, 2007, PMQC announced that it was terminating its previously announced acquisition of BioValve Technologies.
Paramount Acquisition Corp. Announces Signing of Definitive Agreement to Acquire Chem Rx, an Institutional Pharmacy Leader
Monday June 4, 8:30 am ET
NEW YORK, June 4 /PRNewswire-FirstCall/ -- Paramount Acquisition Corp. (OTC Bulletin Board: PMQC - News, PMQCU - News, PMQCW - News), a special purpose acquisition corporation ("SPAC"), announced today the signing of a definitive agreement to acquire Chem Rx, a major privately-owned long-term care pharmacy based in Long Beach, New York.
Under the terms of the agreement, Paramount will acquire all of the outstanding capital stock of Chem Rx ("Chem Rx" or the "Company") for $133.0 million in cash, and will issue 2,500,000 shares of Paramount common stock to the selling shareholders, who will, as a group, have the largest ownership interest in Paramount based on current holdings. The selling shareholders will also be entitled to additional consideration of up to $12.5 million cash and 9,000,000 shares of Paramount common stock upon the achievement of certain financial and share price milestones between 2007 and 2011.
The Chem Rx management team will remain in place after the closing of the transaction, led by Jerry Silva, R. Ph., who will continue as Chairman and Chief Executive Officer, and Steven Silva, who will serve as President and Chief Operating Officer. Other members of senior management of the Company are expected to sign employment agreements that become effective at the closing.
Paramount expects to finance the cash portion of the purchase price using the cash in its trust account (net of liabilities) as well as borrowings under term and revolving credit facilities that it expects to establish at the closing. In addition, Paramount has agreed to repay up to $32.5 million of Chem Rx indebtedness, with any additional amounts of indebtedness at closing to be repaid by the selling shareholders. Paramount is currently negotiating commitments for these credit facilities.
The closing of the transaction is subject to Paramount stockholder approval, receipt of financing sufficient to consummate the transaction and other customary closing conditions. Paramount expects to promptly file a preliminary proxy statement concerning the transaction, which will be subject to review by the Securities and Exchange Commission. Assuming these conditions are met, Paramount anticipates completing the transaction in the third or fourth quarter of 2007.
J. Jay Lobell, CEO of Paramount Acquisition Corp., said, "We are extremely pleased to announce the signing of this agreement to acquire Chem Rx. As one of the nation's leading long-term care pharmacies, Chem Rx enjoys highly favorable demographic trends and combines a demonstrated operating history and seasoned management team with a well-developed infrastructure and established industry relationships. We believe this combination of industry strength, executive experience and proven results can provide a catalyst for long-term growth. The Company's consistent regional growth, coupled with recent and future expansion plans, positions the Company as a leader in the space and a potential consolidator."
Founded more than 40 years ago, Chem Rx is the leading privately-owned long-term care pharmacy serving the New York City metropolitan area, as well as parts of New Jersey and Pennsylvania. Chem Rx's client base includes skilled nursing facilities and a wide range of other long-term care facilities. The Company provides to more than 60,000 residents prescription and non-prescription drugs, intravenous medications, durable medical equipment items and surgical supplies. For the 12-month period ended March 31, 2007, Chem Rx generated approximately $272 million in revenue and EBITDA of more than $24,000,000 (as adjusted to add back certain one-time and non-recurring charges).
Jerry Silva, R. Ph, Chairman and CEO of Chem Rx, said, "We are excited to be partnering with Paramount and entering the public markets during a time of unparalleled opportunity for Chem Rx. We foresee continued internal growth and numerous opportunities to expand in the Northeast and selected other areas, while maintaining the same high level of customer service and attention for which we are well-known. We have already achieved during 2007 our largest annual bed growth in our history and we look forward to working with Paramount to deliver results to Paramount's investors."
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