ISTA gets $65 million facility; U.S. Starcom lands $3.12 million, investor; Lombard eyes breathing room

By Kenneth Lim

Boston, Sept. 26 - ISTA Pharmaceuticals, Inc. secured a $65 million credit facility from existing shareholders that management said will provide capital without diluting value for shareholders.

U.S. Starcom Inc. described its $3.12 million sale of notes and shares to Sigma Opportunity Fund, LLC as an important long-term strategic relationship.

Lombard Medical Technologies plc said it plans to raise £1.6 million that will give the company some breathing room as it seeks longer-term funding.

ISTA secures $65 million facility

ISTA said it has obtained a $65 million credit facility from long-term shareholders Deerfield Management, Sprout and Sanderling Ventures.

ISTA has drawn $40 million and will be able to draw up to an additional $25 million any time over the next 12 months in $5 million increments.

Any amounts drawn accrue interest until maturity at a rate of 6.5% per annum, payable on a quarterly basis. Any funds drawn are repayable in one-third increments in 2011, 2012 and 2013.

The investors will also receive warrants for 12.5 million common shares, which are exercisable at $1.41. For subsequent drawdowns, ISTA will issue 500,000 warrants per $5 million drawn. The exercise price of the future warrants will be the higher of the common stock's current market price and $1.41.

ISTA common stock (Nasdaq: ISTA) closed at $1.57 on Friday, higher by 11.35% or $0.16.

ISTA Pharmaceuticals is an ophthalmic pharmaceutical company based in Irvine, Calif.

"Deerfield, Sanderling, and Sprout are leading health care investors and also three of ISTA's largest investors, and we appreciate their continued funding of ISTA's growth," ISTA president and chief executive Vicente Anido, Jr. said in a statement.

"This $65 million facility is the culmination of five months of assessing our business and strategic options. Our goal was to ensure we could flexibly fund ISTA's future growth while minimizing dilution impact on our shareholders. We fully believe these corporate finance activities have the potential to give our shareholders the best potential return on their investment."

U.S. Starcom closes deal

U.S. Starcom welcomed new strategic investor Sigma Opportunity Fund with the closing of a $3.12 million private placement of 8% senior subordinated secured notes due 2011 and stock.

The financing comprised $2 million of the notes and $1.12 million of its common stock. The equity portion consists of approximately 4.05 million common shares, which were sold with warrants for approximately 1.14 million common shares.

U.S. Starcom common stock (OTCBB: USTA) closed at $0.03 on Friday, but the stock will undergo a 1:10 reverse stock split on Monday.

Of the proceeds, $2 million will be held in an interest-bearing escrow account and, upon release, will go primarily towards the expansion of the company's Bell Latino division. Interest earned on the funds in escrow will go directly to the company, effectively reducing the interest rate paid on the note.

Based in Perth Amboy, N.J., U.S. Starcom provides diversified communication, financial and transaction-based services, primarily targeted at the emerging U. S. Latino communities and business markets.

As part of the financing, Sigma will appoint two of U.S. Starcom's seven directors. Sigma will also appoint an observer to the board. Sigma and the company will also jointly appoint two independent directors.

"This transaction provides us with the financial resources to execute our Bell Latino expansion strategy and facilitates our ability to capitalize on the many growth opportunities in our industry," U.S. Starcom chairman and chief executive John DiDomenico said in a statement.

"The addition of Sigma, a well respected private equity fund, as a long-term strategic partner significantly strengthens our core. I expect Sigma's active involvement to serve as a catalyst for our evolution as a public company, continued revenue growth, sustainable operational and financial excellence, reduced execution risk, solid corporate governance and wider capital markets exposure to high quality institutional investors."

Sigma manager Thom Waye also stated: "U.S. Starcom, through its Bell Latino division, has the potential to emerge as a leading transaction-based services provider to a fast growing, yet underserved, segment of the U.S. population. In parallel to the development of Bell Latino, the company's core Telecom division provides a solid, profitable base of operations, which is also positioned for further growth. We are excited to partner with U.S. Starcom both strategically and financially and look forward to working closely with management over the next few years to build the company into a more profitable and expansive public company."

Lombard plans £1.6 million deal

Lombard said it plans to raise £1.6 million through a sale of floating-rate convertible notes.

The unsecured notes will bear interest at 100 basis points above the average annual Base Rate of the Bank of England.

Company directors will take £75,000 of the offering. Lombard also plans to offer qualifying shareholders and employees a chance to subscribe for up to €2.5 million of convertible notes on the same terms and conditions.

Proceeds will be used to complete the company's ongoing long-term financing discussions as well as progress certain key near-term objectives.

Lombard is a medical device company based in London.

The company also said that the proceeds from the deal along with its existing cash resources will allow Lombard to trade into January 2009. If the board is unable to secure additional sources of funding, the company will have insufficient resources to trade beyond that date.

The company said it is currently seeking long-term funding, and announced that a "significant Middle Eastern bank has expressed an interest in investing through equity up to $15 million in Lombard."

"We are very pleased that the investment community has continued to show its support for the company, particularly at a time when the capital markets are under such pressure," Lombard chairman Simon Neathercoat said in a statement. "These funds provide us with the breathing space we require, whilst talks continue with a number of parties to secure the long-term funding requirements of the company."

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