N. American Scientific Gets Funding

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Chatsworth-based North American Scientific Inc. said Tuesday that it has entered into a binding agreement to raise $24 million in a private placement of common stock and the concurrent issuance of warrants for the purchase of common stock.


Net proceeds from the financing will be used for new product development, including the company’s breast brachytherapy product, and for working capital. The company makes a variety of radiation therapy products and services.


Chief Executive L. Michael Cutrer said the company expects that the proceeds from this offering will allow North American Scientific to regain compliance with Nasdaq listing requirements. The company in March received a warning that based on its fourth-quarter filing the company was not in compliance with the minimum $10 million stockholders equity requirement for continued listing on the Nasdaq National Market, generally comprised of large- and mid-cap companies.


Three Arch Partners is leading the private placement and will invest $10 million. As part of the transaction, Three Arch will nominate two new board members to join North American Scientific’s Board of Directors. CIBC World Markets Corp. acted as the sole placement agent for the transaction.


The company said it expects the placement to close on Wednesday, with investors receiving 12.3 million shares of stock priced at $1.95 per share and warrants to purchase an additional 6.1 million shares at an exercise price of $2.08. The company also plans to release second quarter financials on Wednesday.


“This transaction will allow North American Scientific to maintain its operations while aggressively pursuing our breast brachytherapy product introduction,” said Cutrer in a statement.


North American Scientific shares closed up 3.7 percent to $1.96, prior to the announcement. The stock has traded between $1.82 and $4.13 over the past 52 weeks.

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