Merge Healthcare to redeem all outstanding series A preferred stock

By Angela McDaniels

Tacoma, Wash., June 16 - Merge Healthcare Inc. said it plans to repurchase all of its outstanding series A preferred stock, which has an accrued liquidation preference of about $49 million.

The company will use the proceeds from the sale of up to an additional $52 million of its 11¾% senior secured notes due 2015 to fund the repurchase.

The company said the preferred holders have agreed to some amendments to the terms of the preferreds that will permit this redemption without the payment of otherwise-required redemption premiums, which would total about $6 million.

Merge Healthcare believes that it is in the best interests of the company and its stockholders to redeem the preferreds given their 15% dividend rate, compared with the 11¾% coupon on the notes, and the uncertainty as to whether market conditions would permit a similar additional note offering and preferred stock redemption in the future.

None of the proceeds from the add-on will be used to finance the company's proposed acquisition of Ophthalmic Imaging Systems, Inc., which is expected to occur before July. The company will exchange its common stock for all of the outstanding common stock of Ophthalmic Imaging, and its out-of-pocket expenses will be paid from its available cash.

Merge Healthcare provides enterprise imaging solutions for radiology, cardiology and orthopaedics; a suite of products for clinical trials; and software for financial and pre-surgical management. It is based in Chicago.

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