Oklahoma City-based Graymark Healthcare Inc, the nation's second-largest provider of sleep diagnostic services, has pushed back the closing date of a merger that could save the company from scaling back its operations or shutting down.
Graymark's Chief Operating Officer Daryl Royer said Tuesday that he anticipates the company's merger with Oklahoma City-based Foundation Surgery Affiliates will close in the third quarter. Previously the company had said it expected to close the deal before the end of the second quarter.
“Like any business transaction of this nature, there are significant steps to get us there and it's just a matter of timing,” Royer said. “The transaction is still in progress. There are no assurances the transaction will close, but we do anticipate it will.”
Graymark said in a regulatory filing in May that it faced a serious cash shortfall and could be forced to cease operations if it could not close the merger with Foundation.
The company posted a $2.7 million loss in the first quarter and faced a cash shortfall of more than $20 million at the end of March, according to regulatory filings.
“If the company is unable to close the Foundation transaction or raise additional funds, the company may be forced to substantially scale back operations or entirely cease its operations and discontinue business,” Graymark said in the filing.
Oklahoma City businessman Roy Oliver, one of Graymark's largest shareholders, has loaned Graymark $2.4 million over the past year to help the company make debt service, the company has said in regulatory filings. A call to Oliver's office was not returned on Tuesday.
Foundation owns and operates 21 outpatient surgery centers and surgical hospitals in seven states. Graymark and Foundation signed a letter of intent to merge in August, but have pushed back the closing date several times.
The reverse merger with Graymark would allow the privately held Foundation to become .
In the proposed deal's latest terms, Graymark would give Foundation 98.5 million shares of stock to purchase Foundation. The new company would be called Foundation/Graymark and primarily focus on Foundation's surgical business.
A call to Foundation's Oklahoma City headquarters was not returned on Tuesday.
Graymark had 104 sleep clinics in 10 states as of January. Graymark has about 55 employees in Oklahoma City, Royer said Tuesday.
The Nasdaq Stock Market delisted Graymark's stock in November for failing to meet minimum stock price requirements.
Like any business transaction of this nature, there are significant steps to get us there and it's just a matter of timing.”
Graymark's Chief Operating Officer