Former Minority Shareholders of Subsidiary to Invest in Nyer Medical Group; President of subsidiary to become CEO and President of Nyer Medical Group
BANGOR, Maine, Dec. 26 /PRNewswire-FirstCall/ -- Nyer Medical Group, Inc. (Nasdaq: NYER) today announced that it has reached agreement with the minority shareholders of its subsidiary, D.A.W., Inc. d/b/a Eaton Apothecary to acquire the remaining 20% interest in the pharmacy chain in fulfillment of Nyer's obligation pursuant to a 1996 shareholder agreement.
By agreeing to a series of transactions, the minority shareholders will immediately assume management of Nyer and will control approximately 58% of the voting power of Nyer. Karen Wright will resign her position as President of Nyer, while continuing as Vice-President-Finance. She, Donald Lewis and Dr. Kenneth Nyer will resign their board positions while the Nyer board will elect Mark and David Dumouchel to the board. Mark Dumouchel, president of the pharmacy subsidiary since 1990, will be appointed Chief Executive Officer and President of Nyer. Upon closing, certain former subsidiary minority shareholders will sign three-year employment agreements to serve as executive pharmacy managers. As conditions of the buyout are met, all preferred shares of the company will be retired.
Over time and when fully realized upon, Nyer will satisfy its $4 million obligation through a series of transactions. The agreement provides for a $1.75 million cash payment, the issuance of a new class B2 convertible preferred shares to the minority shareholders, and the issuance of two notes, a $350,000 promissory note bearing interest at a rate of 7% per annum maturing in 5 years and a $1.5 million convertible promissory note bearing interest at a rate of 8% per annum maturing in 3 years. The class B2 preferred shares will convert to 218,000 shares of common stock, subject to adjustment, in 3 years provided Nyer meets certain financial obligations to the minority shareholders. The convertible note is convertible at any time following one year at the holders' election into Nyer common stock at an initial conversion rate of $1.84 per share, subject to adjustment, and is redeemable at the holders' election, in whole or in part, based upon the occurrence of certain transactions. It is anticipated that the cash funding for the transaction will occur through D.A.W.'s increased available cash flow, as a result of the extension of payment terms by its major supplier.
The new agreement also calls for Nyer to simultaneously acquire 100% of its outstanding shares of Class A and B preferred stock owned by Samuel Nyer in exchange for a $400,000 promissory note bearing interest at a rate of 7% per annum maturing in 5 years. In addition, the minority shareholders of D.A.W. have agreed to purchase 597,827 shares of Nyer common stock owned by Nyle International Corp. for $1.84 per share.
The change of control that would be caused by these transactions is subject to Nyer shareholder approval and other closing conditions.
"We are very pleased to have reached this agreement and look forward to the realization of the true value of the Company's stock," said D.A.W. president and incoming Nyer CEO Mark Dumouchel.
"We are excited we have reached an agreement to purchase the remaining 20% of our pharmacy segment, D.A.W., Inc. and will have employment contracts with our five executive pharmacy managers, stated Karen Wright, current President of Nyer Medical Group, Inc. "This is an important time for the Company as we strive to increase profitability and increase shareholder value."
Nyer Medical Group, Inc. is a holding company that operates pharmacies in the greater Boston area and a medical products distribution business that distributes and markets medical equipment and supply products to hospitals, physicians and nursing homes using relationship-based telemarketing, direct sales personnel, catalogs and the Internet. These orders are filled by the Company's distribution centers located in New England and South Florida.
WARNING REGARDING FORWARD-LOOKING STATEMENTS
This Current Report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Statements in this Current Report which are not strictly historical including, but not limited to, statements regarding the events that will happen upon closing of the transactions described above and statements involving profitability and shareholder value, are "forward- looking" statements which are subject to many risks and uncertainties. These include the failure to satisfy the closing conditions set forth in the Amended Agreement and/or the Purchase and Sale Agreement, a significant delay in the closing for any reason, business uncertainty before closing and economic, competitive, governmental and other factors identified in Nyer's filings with the Securities and Exchange Commission. The Registrant does not undertake any obligation to update these forward-looking statements.
|SOURCE Nyer Medical Group, Inc.|
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