Medical Resources wins stock purchase rights

Imaging center chain Medical Resources has signed an agreement with RGC International Investors that gives Medical Resources the right to purchase part or all of its preferred stock owned by RGC through Sept. 30. Prior to the agreement, the Hackensack, NJ, imaging center chain had the right to repurchase this stock only if the company was sold, and the purchase price included a 15% premium. Under the old agreement, RGC also had the right to exact a one-time penalty of 10%—$1.4 million of the preferred stock—in cash from Medical Resources.

The new deal gives Medical Resources the ability to buy back its preferred stock for the price at which it was issued, plus 3% from the original issuance date through the repurchase date, without either the 15% premium or the 10% penalty. If Medical Resources chooses not to buy its preferred stock by the due date, its earlier agreement with RGC will be reinstated. Following a large net loss for fiscal year 1998, the company in March hired BT Alex. Brown of New York City as its financial advisor, and stated that it would seek merger or acquisition partners (SCAN 3/31/99).

In other Medical Resources news, the U.S. district court in New Jersey has approved the settlement of the consolidated class action lawsuits currently pending against the company (SCAN 1/13/99). The suits were filed in late 1997, after the company was rocked by allegations over advisory fees paid to then-chairman Gary Siegler (SCAN 12/17/97). Under the terms of the settlement agreement, plaintiffs in the aggregate will receive $2.75 million in insurance proceeds and $5.25 million in face amount of converted subordinated notes to be issued by the company.