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LED Medical to acquire software development company


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LED Medical to acquire software development company

LED Medical Diagnostics Inc. agreed to acquire Apteryx, a software development company, for about $10.3 million.

The company will pay Apteryx $6.8 million in cash at closing, $700,000 payable in cash in tranches over 18 months, a hold back of $500,000 and $2.3 million in LED common shares.

LED expects this transaction to be immediately accretive, allowing the company to reach profitability before the end of 2017.

The company intends to fund the deal primarily through an equity financing by way of a brokered private placement of units. It will sell its units for 6 Canadian cents apiece for gross proceeds of about C$11 million.

Each unit will include 1 common share and 0.5 common share purchase warrant. The warrants are exercisable within a period of 24 months into 1 common share of LED at a price of 10 cents per share.

The transaction will also be financed by a debt financing through a brokered private placement of 12% senior secured debentures of about C$2 million, maturing 24 months from the closing date of the deal. In connection with the debenture issuance, LED will grant a total of 2,550,000 common shares as a loan bonus to the debenture holders.

The transaction is expected to close in the first quarter of 2017, subject to financing and regulatory and other approvals. The acquisition and transaction financing are also subject to the approval of the TSX Venture Exchange.

Upon closing of the acquisition, Apteryx will operate as a stand-alone unit of LED. In addition, Apteryx founder and CEO Kevin Crucs will join the senior management team of LED and will continue to lead the Apteryx business as a significant shareholder of LED.

Bloom Burton Securities Inc. is acting as sole agent and financial adviser to LED for the acquisition and related financings.