Zila, Inc., international provider of healthcare and biotechnology products for dental/medical professionals and consumers, announced that it has agreed with PracticeWares, Inc., of Sacramento, Calif., to restructure the terms relating to the sale of the Zila Dental Supply mail order business. Zila sold that business to PracticeWares on December 4, 2001, for consideration represented by short- and long-term notes. Since March 1, 2002, the parties have been engaged in negotiations and have agreed to restructure the transaction. The Boards of Directors of both companies have approved the restructured terms, and definitive agreements are being prepared.
Under the restructured terms, PracticeWares will issue to Zila a new, secured $8.54 million convertible interest-bearing note. Approximately 30 percent of the note is due in May 2002. That payment to Zila is expected to be financed by an institutional lending source and will be subject to its approval. The balance of the note, subject to certain post-closing adjustments, will be due within five years on an amortization schedule negotiated by the parties. Zila will receive, as part of the transaction, a small equity interest in PracticeWares and, subject to Board approvals, note payment guarantees from certain PracticeWares shareholders.
As part of the transaction, PracticeWorks, Inc., a dental practice management software systems provider, and PracticeWares will enter into a 20-year e-commerce agreement under which PracticeWares will be able to offer products and services to the PracticeWorks dental subscriber base. The agreement is subject to the approval of the PracticeWorks board of directors.
Additional details of the transaction are available in Zila's 10-Q report for the quarter ended January 31, 2002.
Zila President Joseph Hines said, "The restructured arrangement and the resulting completion of the transaction will allow management to concentrate on the growth of Zila's core business and on clinical work associated with its Zila(R) Tolonium Chloride and OraTest(R) products."
