Software company Merge Healthcare, Milwaukee, will offer 9 million shares of common stock to select institutional investors.
The company expects to raise about $25.2 million from the sale, according to a prospectus filed with the Securities and Exchange Commission. Merge will use $18.1 million of the proceeds to retire a note held by Merrick RIS, which owns roughly 43% of Merge's common stock. Merge agreed to prepay the note, due in 2010, in exchange for a commitment by Merrick and its principals not to exercise piggyback registration rights or sell shares within 90 days of the offering.
Michael Ferro, chairman of Merge's board of directors, is chairman and CEO of Merrick RIS affiliate Merrick Ventures, and Merge CEO Justin Dearborn previously was a managing director and general counsel for Merrick Ventures. The remaining proceeds will fund "general corporate purposes, including working capital."
Merge makes software that automates diagnostic data and imaging workflow. In October the company reported a third-quarter operating loss of $156,000 on sales of $16.9 million.