Trans-Continental X-ray is moving quickly to integrate the assetsof Transworld X-ray, purchased six months ago after Transworldwas forced into involuntary bankruptcy. The transaction has spawnedaccusations of Machiavellian maneuvering in the x-ray market
Trans-Continental X-ray is moving quickly to integrate the assetsof Transworld X-ray, purchased six months ago after Transworldwas forced into involuntary bankruptcy. The transaction has spawnedaccusations of Machiavellian maneuvering in the x-ray market afterrumors began circulating that the sale could be reversed by Transworld'sdisgruntled creditors.
The parent company of Trans-Continental, Continental X-ray,bought Transworld's assets in February from a Rhode Island bankthat had foreclosed on the company to recoup a $4.8 million securedclaim (SCAN 2/11/92).
The amount Continental paid for Transworld is being determinedby a formula that is applied monthly as the value of Transworld'sassets are determined. Trans-Continental X-ray was formed afterthe purchase to market the Pineville, SC-based vendor's products.
The acquisition improved Continental's share of the radiographymarket and automatically made Trans-Continental a player in mammography.Transworld had installed over 800 mammography systems since enteringthe market four years ago. Both Continental and Trans-Continentalare based in Broadview, IL.
Rumors have been circulating since the sale that the acquisitioncould be reversed, however. Three creditors with unsecured claimshave made noise about challenging the sale of Transworld. Continentalis concerned that these rumors might cause former Transworld customersto believe that they should not make payments on their accountsto Trans-Continental, which purchased the Transworld receivables.
The rumors are entirely without merit, according to PatrickT. Fitzgerald, president of Continental and Trans-Continental.
"There has never been a motion submitted to reverse ouracquisition," Fitzgerald said. "We don't think thatthere's any ground for reversing it."
The three creditors have retained an attorney, but a spokespersonfor the law firm said that no action has been filed to stop thesale at this time.
The creditors are upset because the bank's sale of Transworld'sassets reduces the likelihood that they will receive the moneythey are owed, Fitzgerald said. The Transworld sale was handledproperly, however, and the bankruptcy trustee overseeing the caseadvised Trans-Continental's attorneys that a motion to reversethe sale is not likely to be filed, Fitzgerald added.
Fitzgerald attributed the rumors to competitors in the x-raymarket, who have distributed mailings to dealers suggesting thatthe transaction could be voided. Those companies, which Fitzgeralddeclined to identify, have been contacted by Trans-Continental'sattorneys.
In the meantime, Trans-Continental is moving forward in itseffort to develop former Transworld products. Trans-Continentalis in full production of the MAM-CP-II mammography system, aswell as a series of high-frequency x-ray generators.
Continental was developing a high-frequency generator beforethe Transworld acquisition, but Fitzgerald estimates that gettingthe Transworld product into the pipeline moved the company's effortsahead by three years.
Trans-Continental has received approval from the Food and DrugAdministration on a tilt magnification option for the CP-II, whichenables imaging closer to the chest wall. The company is planningadditional variations on the CP-II, to be unveiled at this year'sRadiological Society of North America meeting, Fitzgerald said.
Trans-Continental's seven-figure investment in bringing formerTransworld products to market is proof of the permanence of thesale despite rumors to the contrary, Fitzgerald said.
"We're investing a million dollars of our own cash intoTrans-Continental product development," Fitzgerald said."We have submitted and received approval on improvement ofthe mammography product from the FDA. You don't go through a submissionprocess if you don't intend to proceed with the product."
"The Signa spectroscopy program is not a part of the GENMR Instruments sale," he said in a written response to questionsby SCAN. "The Signa spectroscopy program is integral to GEMedical System's MR business."
The MRI facility is housed in a separate location from otherMEMS operations in Arlington for safety purposes. The ISO hastrained its staff regarding potential hazards of working withthe strong magnetic fields involved in high-field MRI service,MEMS said.