Health Discovery to raise $2.5 million; IWT Tesoro prices $10 million preferreds

By LLuvia Mares

New York, Aug. 16 - Health Discovery Corp. entered into an agreement for a maximum $2.5 million private placement of stock with warrants.

Under the private placement, Health Discovery expects to raise a minimum of $1.5 million to a maximum of $2.5 million in new equity funding.

"We are very optimistic that we will reach the maximum," said a company insider.

The stock will be sold at $0.08 to several institutions and accredited individuals. Health Discovery also has non-binding commitments from other individuals.

On top of the private placement, up to $2,153,900 in outstanding debt and accrued interest will be converted to stock as part of the transaction.

Purchasers of common shares, including those converting indebtedness, will be given a warrant to acquire an equal number of restricted common shares at a fixed price of $0.14 each and a warrant to acquire an equal number of restricted common shares at a fixed price of $0.19, each exercisable until September 2010.

The insider told Prospect News the proceeds will be used toward funding the business as well as paying some minor debt.

The financing is expected to close Sept. 7.

Savannah, Ga.-based Health Discovery expects the transaction will strengthen its balance sheet by eliminating debt as well as providing funding for the business.

Health Discovery is a biology-oriented biomarker discovery company providing all aspects of first-phase biomarker discovery.

IWT Tesoro prices $10 million convertibles

IWT Tesoro Corp. announced a $10 million offering of convertible cumulative preferred stock.

KMA Capital Partners, Inc., a merchant banking firm, agreed to purchase up to 2 million shares of series A convertible cumulative preferred stock at $5.00 each in the deal, which priced Wednesday. KMA can pay for the preferreds in tranches.

The preferreds are convertible into Tesoro common stock at $0.625 per share, a ratio of eight shares of common stock for each preferred.

The company will have to meet a certain performance criteria, according to the agreed term sheet. If the criteria are not met, each preferred is convertible into 20 shares of common stock.

Following Tesoro receiving a substantial portion of the funding, the performance criteria include satisfying certain subordinate debt on mutually agreeable terms, sustaining sales at not less than $40 million following receiving a portion of the funding, maintaining a senior credit facility and keeping a positive net worth.

The dividend starts at 4% in the first year, steps up to 6% in the second year, 8% in the third year, and rises to 10% for the fourth year onwards.

Westport, Conn.-based Tesoro is a wholesale-driven tile distributor.

Delta details $10 million convertibles

Delta Financial Corp. announced Thursday details of its $10 million in convertible notes.

The notes are part of a total $70 million financing with Angelo, Gordon & Co. announced Tuesday.

As well as the $10 million convertibles, the cash injection includes a $60 million repurchase financing facility.

The notes are convertible into 2 million shares at a conversion price of $5.00 per share.

As part of the financing, Angelo Gordon received warrants for 10 million shares with an exercise price of $5.00 each.

Woodbury, N.Y.-based Delta Financial is a specialty consumer finance company that originates, securitizes and sells non-conforming mortgage loans.

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