CynergisTek Makes Advance Payment of Bank Debt and Negotiates New Financing with BMO Harris Bank
13 März 2018 - 12:08AM
Business Wire
CynergisTek, Inc. (NYSE AMERICAN: CTEK), a leader in healthcare
cybersecurity and information management, today announced that it
has modified its debt through a new agreement with BMO Harris Bank,
N.A. (BMO). The restructuring included paying off the Company’s
Avidbank term loan and 75 percent of the amount due pursuant to
promissory notes from the January 2017 acquisition of CynergisTek.
Commensurate with this restructuring, Dr. Michael Hernandez has
resigned as COO of CynergisTek effective March 12, 2018 and will
step down from the Board of Directors to pursue other
opportunities. Dr. Hernandez has been working with the leadership
team on this transition.
“I want to welcome our new business partner BMO and I look
forward to what we’ll be able to do together,” stated Mac McMillan,
CEO of CynergisTek. “Change is an inevitable component of business
and great organizations plan for it. In addition to taking this
step with BMO this year we’ve also taken decisive steps to
strengthen our management team and our ability to grow. Angela
Rivera and David Finn are already having a positive impact and this
new partnership with BMO will better position us to execute our
strategy in 2018 and beyond.”
“This new banking relationship will allow us to optimize our
capital structure to align both our business and financial
strategies, focusing on long term growth for the Company,” stated
Paul Anthony, CFO of CynergisTek. “With BMO, we will have a partner
who can bring added advisory services which will be essential as we
execute on our strategic initiatives. We feel these initiatives
will best serve the interest of the Company and our shareholders.
This transaction also demonstrates Mr. McMillan’s commitment to the
business as a shareholder with his agreement to reduce contingent
cash obligations payable to him via the original earnout provision
of the CynergisTek acquisition agreement.”
Below is a summary of the transaction:
- Issuance of a new 4.5 year $17,250,000
term loan and a $5,000,000 revolving line of credit from BMO (BMO
Harris Bank, N.A.)
- Repayment in full and cancellation of
the current Avidbank term loan and line of credit
- Repayment of $6,750,000 of the amounts
due under promissory notes to Mr. Mac McMillan and Dr. Michael
Hernandez
- Extension of the maturity of the
remaining $2,250,000 promissory note to Mr. McMillan
- Modification of the earnout provisions
to guarantee Dr. Mike Hernandez’s earnout through a $3,750,000 note
issuance with a five year maturity earning interest at five
percent
- Reducing Mr. McMillan’s remaining
earnout potential to $1,200,000, tied to financial performance for
the next three years, as set by the board of directors at the
beginning of each year.
Greater detail regarding this information can be obtained in our
Current Report on Form 8-K filed with the SEC on or about the date
hereof.
About CynergisTek Inc.
CynergisTek is a top-ranked cybersecurity and information
management consulting firm dedicated to serving the healthcare
industry. CynergisTek offers specialized services and solutions to
help organizations achieve privacy, security, compliance, and
document output management goals. Since 2004, the company has
served as a partner to hundreds of healthcare organizations and is
dedicated to supporting and educating the industry by contributing
to relevant industry associations. The company has been named in
numerous research reports as one of the top firms that provider
organizations turn to for privacy and security and won the 2017
Best in KLAS award for Cyber Security Advisory Services.
About BMO
As one of the largest diversified financial services providers
in North America with over $500B in assets, BMO is a global,
universal bank with full service corporate and investment banking
platforms. For over 200 years BMO has served commercial clients
with a broad range of financing, operational, and advisory
services.
Forward Looking Statements
This release contains certain forward-looking statements
relating to the business of CynergisTek that can be identified by
the use of forward-looking terminology such as “believes,”
“expects,” “anticipates,” “may” or similar expressions. Such
forward-looking statements involve known and unknown risks and
uncertainties, including uncertainties relating to product/services
development, long and uncertain sales cycles, the ability to obtain
or maintain patent or other proprietary intellectual property
protection, market acceptance, future capital requirements,
competition from other providers, the ability of our vendors to
continue supplying the company with equipment, parts, supplies and
services at comparable terms and prices and other factors that may
cause actual results to be materially different from those
described herein as anticipated, believed, estimated or expected.
Certain of these risks and uncertainties are or will be described
in greater detail in our Form 10-K and Form 10-Q filings with the
Securities and Exchange Commission, which are available at
http://www.sec.gov. CynergisTek is under no obligation (and
expressly disclaims any such obligation) to update or alter its
forward-looking statements whether as a result of new information,
future events or otherwise.
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version on businesswire.com: http://www.businesswire.com/news/home/20180312006292/en/
Investor Relations Contact:CynergisTek, Inc.Bryan
FlynnInvestorRelations@CynergisTek.com
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