Healthcare Corp. investors extend deadline for additional financing

Company now has until May 30 to raise $3.5 million in new financing

By Angela McDaniels

Tacoma, Wash., May 23 - Healthcare Corp. of America said the investors in its recent $1 million private placement of 8% junior secured convertible notes agreed to further extend the company's deadline for securing additional financing.

Under the terms of the April 4 placement, the company agreed to the following:

• If the company has failed to secure at least $1.5 million of new financing by May 4, it will constitute an event of default;

• If the company has secured at least $1.5 million but less than $3.5 million of new financing by May 4, it will have an additional 30 days to secure the additional amount; and

• If the company has failed to secure at least $3.5 million by the end of those additional 30 days, it will constitute an event of default.

On May 2, the company and the investors agreed to extend the deadline to May 9. On May 7, they agreed to extend it to May 23. On May 23, they agreed to extend it May 30.

As previously reported, the notes mature on April 2, 2015 and are convertible into common stock at the lowest price per share of the securities sold in the company's next financing. The notes may be prepaid.

The investors also received warrants for 2 million shares, which are each exercisable for five years. The strike price will be equal to the lowest of the price of common equity sold in the company's next financing, the conversion price of a convertible note sold after the company's next financing or the exercise price of the warrants issued in the company's next financing.

Selway Capital Holdings LLC invested $900,000. It is 50% owned by Healthcare Corp. directors Edmundo Gonzalez and Yaron Eitan.

Proceeds will be used for general working capital purposes.

The pharmacy-benefit manager is based in Denville, N.J.

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