SOURCE: Northstar Healthcare Inc.

Northstar Healthcare Inc.

September 30, 2014 09:48 ET

Northstar Healthcare Closes Acquisition of Interests in Houston Hospital and ASC

HOUSTON, TX--(Marketwired - Sep 30, 2014) - Northstar Healthcare Inc. (TSX: NHC) today announced that it has closed the transaction with First Surgical Partners Holdings, Inc. ("First Surgical") to form a new entity to own and operate the Houston, Texas hospital and surgical center businesses owned by First Surgical.

Under the transaction, Northstar and First Surgical formed First Nobilis, LLC, a Texas limited liability company ("First Nobilis"), to assume the operations of First Surgical Hospital and First Street Surgical Center. First Nobilis is owned 51% by Northstar and 49% by First Surgical. First Nobilis formed two subsidiary Texas limited liability companies to be the new operating entities. Northstar has also signed management agreements to manage the operations of the hospital and surgical center. Northstar contributed a total of U.S. $7.5 million to First Nobilis, which was raised by a recently closed brokered private placement. 

On September 26, 2014, the Company closed the brokered private placement previously announced on September 9, 2014 (the "Private Placement") and led by PI Financial Corp., as agent (the "Agent").

The Company raised gross proceeds of $7,238,920 in the Private Placement through the issuance of a total of 5,568,400 units (each, a "Unit"), at a price of $1.30 per Unit. Each Unit consists of one common share in the capital of the Company (each, a "Share") and one-half of one transferable common share purchase warrant where each whole warrant is exercisable for one additional Share at a price of $1.80 per unit until September 26, 2016.

Pursuant to an agency agreement entered into between the Company and the Agent, an aggregate of 332,908 transferable Agent's warrants (the "Agent's Warrants") were issued to the Agent, representing approximately seven percent (7%) of the Units sold in the Private Placement. Each Agent's Warrant is exercisable for one additional Share at a price of $1.37 until September 26, 2016. In addition, the Agent has also been paid a cash commission representing approximately 7% of the gross proceeds of the Private Placement.

"Northstar chose to raise a lower amount in the Private Placement than previously announced due to the fact that after the announcement of the First Street transaction, Northstar received the proceeds from the exercise of the purchase warrants previously issued in connection with the December 2013 private placement," said Harry Fleming, President of Northstar. "With the exercise of the earlier warrants and the amount of the Private Placement, the total gross amount received by Northstar was approximately $10.4 million."

All of the Securities issued pursuant to the Private Placement are subject to a four month hold period expiring on January 27, 2015. The Private Placement remains subject to final approval of the Toronto Stock Exchange. 

"Northstar is proud to be affiliated with the world class group of surgeons that have partnered to form First Surgical," said Dr. Donald Kramer, Chief Executive Officer of Northstar. "Northstar and First Surgical are committed to a number of initiatives that should prove synergistic to the new organization." 

Dr. Jacob Varon, Chairman of First Surgical, stated, "We are excited for our affiliation with Northstar which will combine the surgical experience of First Surgical with the administrative and marketing expertise of Northstar. This combination will make both companies stronger." 

About Northstar Healthcare Inc.

Northstar owns and manages seven healthcare facilities in Texas and Arizona; four ambulatory surgery centers, two MRI centers and an urgent care center. The four ambulatory surgery centers are located in Houston (two), Dallas and Scottsdale, Arizona.

Forward-looking statements

This news release contains forward-looking statements (within the meaning of applicable securities laws) relating to the business of Northstar Healthcare Inc. (the "Company") and the environment in which it operates including specifically the Private Placement and the Company's planned use of proceeds from the Private Placement for the funding of the new First Surgical entity. Forward-looking statements are identified by words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. These statements are based on the Company's expectations, estimates, forecasts and projections. They are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. These risks and uncertainties are discussed in the Company's regulatory filings available on the Company's web site at www.Northstar-Healthcare.com or at www.sedar.com and include the risk that the Private Placement may not complete as planned or at all There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. Except as required by law, the Company undertakes no obligation to publicly update any such statement or to reflect new information or the occurrence of future events or circumstances.