Clarient Entered Into Private Placement of Up To $50 Million

Convertible Preferred Stock With Oak Investment Partners
–Proceeds to Retire Safeguard and Comerica Debt Facilities; Support Robust Growth

Clarient, Inc., a premier anatomic pathology and molecular testing services resource for pathologists, oncologists and the pharmaceutical industry, announced today that it has entered into a $50 million convertible preferred stock private placement with Oak Investment Partners, a multi-stage venture capital firm with $8.4 billion in committed capital. $40 million of the preferred stock will be sold in two initial tranches. The additional $10 million of preferred stock will only be sold upon further mutual agreement of the parties. The Company received $29.1 million in proceeds from the first tranche today. The proceeds of this first tranche were used to retire approximately $23.8 million of Clarient’s existing debt obligations, pay transaction expenses, and provide working capital. It is expected that the second tranche will close within 60 days. The second tranche proceeds of $10.9 million will be used to retire any remaining debt obligations of the Company to Safeguard Scientifics, Inc. ( and provide additional working capital to fund the Company’s growth.

The purchase price of the preferred stock equates to an effective purchase price of $1.90 per share of underlying common stock, which represents an 11% premium to Clarient’s closing price of $1.71 on March 25, 2009. Under the terms of the private placement, Oak may convert one preferred share into four shares of Clarient common stock. After one year, the preferred shares convert automatically into common shares if Clarient’s common stock trades above $4.75 per share for 20 days in any 30 consecutive trading-day period. After four years, Clarient may redeem all unconverted preferred shares at $7.60 per share, subject to certain adjustments. The preferred shares do not accrue dividends, and there are no warrants being issued in this transaction.

Upon the closing of the first tranche, the existing $30 million mezzanine debt facility from Safeguard was amended to reduce the borrowing availability to $10 million. The balance outstanding under the mezzanine facility, after the application of $14 million of the first tranche proceeds, is approximately $5.5 million. It is the Company’s plan to retire the remaining outstanding balance of, and terminate, the mezzanine facility upon the closing of the second tranche. The mezzanine debt facility bears an annual interest rate of 14% and would require the issuance of a substantial number of warrants beginning June 1, 2009, if the facility is not terminated earlier. There is no penalty for early termination or prepayment of the mezzanine debt facility. The Company will maintain its $8 million Gemino Healthcare Finance, LLC secured credit facility.

The initial tranche of the private placement reduces Safeguard’s ownership of Clarient’s issued and outstanding voting securities from approximately 60% to approximately 50% and provides Oak with an ownership of approximately 17% of Clarient’s issued and outstanding voting securities. Assuming the issuance of the first two tranches totaling $40 million in convertible preferred stock to Oak, Safeguard’s position will be further reduced to approximately 47% of Clarient’s issued and outstanding voting securities, and Oak’s ownership will increase to approximately 21% of Clarient’s issued and outstanding voting securities. With certain exceptions, the preferred shares will be voted with common shares on an as-converted basis.

Full article: http://www.marketwatch.com/news/story/clarient-entered-private-placement-up/story.aspx?guid={EEC7AACB-7C4B-4ECF-8647-341ED91E6062}&dist=TQP_Mod_pressN

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