Conmed to fund merger with Ayelet via debt, convertible financing

By Jennifer Chiou

New York, July 13 - Conmed Healthcare Management, Inc. entered into a merger agreement on Monday with Ayelet Investments LLC and Ayelet Merger Subsidiary, Inc. and will fund the $57.2 million merger consideration using a combination of a $20 million senior secured note and a $5.5 million convertible note provided by Levine Leichtman Capital Partners, according to an 8-K filing with the Securities and Exchange Commission.

The secured note has a purchase price of $18.5 million, and those funds are in addition to $27.3 million of equity financing from James H. Desnick as well as cash on hand. The Ayelet companies are affiliates of Desnick.

Under the agreement, Conmed will be acquired by Ayelet Investments.

The filing stated that the merger agreement contains termination rights for both Conmed and Ayelet, including the right for the company to accept a superior proposal and pay a termination fee of roughly $2.3 million.

Upon effectiveness of the merger, Conmed shares will be automatically canceled and converted into the right to receive $3.85 in cash.

Hanover, Md.-based Conmed is a provider of correctional health care services for municipal and county jails, prisons and detention centers.

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