Fidelity Medical's new owners planrebirth of x-ray digitization firm

May 10, 1995

Company counters rumors of its demiseThe new parents of Fidelity Medical have big plans for the company,which was purchased by Chester Holdings Ltd. last month in a dealworth $900,000 (SCAN 4/26/95). The new Fidelity hit tough goingearly on,

Company counters rumors of its demise

The new parents of Fidelity Medical have big plans for the company,which was purchased by Chester Holdings Ltd. last month in a dealworth $900,000 (SCAN 4/26/95). The new Fidelity hit tough goingearly on, however, as the complex structure of the acquisitionprompted some medical imaging observers to mistakenly believethat Fidelity was going out of business.

Fidelity Medical is a stronger company now that the acquisitionhas been completed and will continue to support its installedbase and suppliers, according to Michael O'Shea, president andCEO of Chester Holdings.

"We have taken the private portion of Fidelity into Chesterand we fully intend to continue to manufacture equipment and toservice the approximately 400 installations we have around theworld," O'Shea said.

Chester Holdings is a publicly traded holding company thathas investments in retail and high-tech businesses. Chester hasmade an effort to clean Fidelity's slate and position the companyfor future growth, according to O'Shea.

"Fidelity Medical as it exists today is a brand-new companyin terms of finances," O'Shea said. "We've left behindall of the old problems that Fidelity suffered in the past."

Most of those problems stemmed from a shareholder lawsuit filedin 1992 against then-CEO Efraim Landa, who had revealed that therewere irregularities in the company's balance sheet (SCAN 8/26/92).Fidelity settled the suit late last year, but the legal battleblackened the company's reputation in the eyes of potential customersand had a dampening effect on sales, according to O'Shea.

Chester Holdings has no plans to dramatically change Fidelity'sexisting operations or cut personnel, and the company will remainat its Wayne, NJ, headquarters.

Fidelity will change its marketing strategy somewhat, fromits previous direct marketing focus to agreements with distributorsand equipment manufacturers. Fidelity is awaiting Food and DrugAdministration clearance on its InstaSpot family, a line of digitalspot film devices forthe digitization of gastrointestinal andstandard radiography/fluoroscopy studies. Fidelity's previousproducts have targeted special procedures angiographic suitesand cardiac cath laboratories.

Chester currently holds 100% of Fidelity's assets, but plansto spin Fidelity off into a public company. Last week Chestercompleted a reverse merger of Fidelity into a public shell, andthis month Fidelity Medical will be trading again on the publicmarkets, according to O'Shea. Chester plans to release about 30%of Fidelity's stock into the public market.

Fidelity will also pursue joint ventures and partnerships withother companies in related fields, O'Shea said. Chester will beable to leverage its experience in this area.

"One thing we bring to the table is the ability to locateand do joint ventures and perhaps mergers with other companies,"O'Shea said. "Fidelity's products and technologies are quitegood in certain fields, but we think that connecting them withother companies' products in the long run will provide a goodbase for growth."