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Venture capital firm Oak Investment Partners has agreed to buy up to $50 million worth of convertible preferred stock in Clarient Inc., which provides pathology and molecular testing services, through a private investment in a public entity (PIPE) transaction.
According to Westport, Conn.-based Oak, the first $40 million will be sold in two tranches; Clarient (Nasdaq: CLRT) has already received the first $29.1 million. The initial tranche will be used to retire approximately $23.8 million of Calif.-based Clarient’s existing debt obligations, pay transaction costs and deliver working capital.
The companies expect to close the second tranche in 60 days and be used to retire any remaining debt owed to Safeguard Scientifics Inc. (NYSE: SFE) and provide additional working capital. The sale of the additional $10 million of preferred stock will depend upon mutual agreement of the companies.
Clarient CEO Ron Andrews stated this transaction will allow the company to retire most of its debt and avoid approximately $11 million in interest expense and fees for 2009. Additionally, it will help fuel growth and help Clarient become profitable.
Ann Lamont, managing partner at Oak, and Andrew Adams, an Oak vice president, have been nominated to Clarient’s nine-member board of directors. They will replace Michael Pellini, Clarient’s president and chief operating officer, and Jon Wampler. Both men have agreed to step down.
Oak Investment Partners is a multi-stage venture capital firm with a committed $8.4 billion.
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