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OptiCare sells N.Y. subsidiary
Date: Jan 17, 2005
Contributor: Camilo Vargas
City-based OptiCare Health Systems Inc. said Thursday it sold its struggling New York subsidiary -- less than two years after buying it -- and the rest of its distribution business to its longtime top executive, who resigned to head the divested operations.
OptiCare said it sold its Yonkers, N.Y.-based distribution division to Dr. Dean J. Yimoyines, one of OptiCare's founders, for $4.2 million, minus an adjustment for working capital, or money to meet obligations due in less than a year. The business employs about 100 people and includes Wise Optical, the contact lens distributor OptiCare bought in February 2003, and the OptiCare buying group, which provides group purchasing arrangements for eye-care professionals.
Yimoyines, OptiCare's chairman and chief executive since Aug. 1999, will keep his seat on the company's board, as well as his position as president and CEO of OptiCare P.C., the affiliate that employs the doctors at its eye-care centers. Christopher J. Walls, who joined OptiCare in February 2002 as vice president and general council, becomes OptiCare's new CEO.
Additionally, OptiCare said Thursday it received a nearly $4.5 million investment from its majority stockholder, Palisade Equity Capital, and a $445,000 investment from Linda Yimoyines, Dean's wife. In return for their investments, they receive 280,618 shares of newly created "Series D" stock, which can be converted into 40 shares of common stock at the option of the holder, the company said.
The sale and the investments will reduce OptiCare's so-called "senior" debt, which in January 2002 stood at roughly $30 million, to about $4 million, the company said. Senior debt has repayment priority over other debt obligations.
It's not the first time New Jersey-based Palisades and Linda Yimoyines have helped boost the company's finances. Palisades, which owns the bulk of the company's shares, stepped up in 2002 to help OptiCare avoid foreclosure and restructure its finances, while Palisade and Linda Yimoyines two years ago acquired 17.5 million shares of OptiCare stock in a deal that brought the company $2.45 million to pay down debt.
OptiCare, with headquarters at 87 Grandview Ave., provides retail eye-care services and contracts with insurers and managed-care health insurance plans to administer eye-health benefits. The sale of the distribution division leaves it with about 360 employees, including 300 in Connecticut, where it operates 18 eye-care centers, and the rest at its managed-care operations in North Carolina.
The sale of the distribution division comes as OptiCare itself has acknowledged difficulties with the former Wise operations, which it bought for $7 million in cash and 750,000 shares of its common stock. However, OptiCare has previously said the business had experienced declining sales and "substantial" operating losses since the acquisition.
"The company has divested itself of noncore, underperforming assets and dramatically decreased its debt over the past few years and can now focus on improving operating efficiencies and growth in its core businesses," Walls said.
Walls joined OptiCare in February 2002 as vice president and general counsel after a 14-month tenure as vice president, corporate counsel and secretary for Cyberian Outpost Inc., the Kent-based Internet retailer. He became the company's president in October, upon the departure of Lance A. Wilkes, who left after less than two years on the job.
OptiCare shares, traded on the American Stock Exchange under the ticker symbol OPT, climbed 1 cent, or 2 percent, to close at 43 cents Thursday. The shares have more than doubled in value since hitting a 52-week low Nov. 1 of 43 cents, but remain significantly below their 52-week high Feb. 24 of 85 cents.
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