PhotoMedex Inc (NASDAQ:PHMD) a Nevada corporation, and First Capital Real Estate Trust Incorporated, a Maryland REIT, announced yesterday that on March 31, 2017 it entered into an Interest Contribution Agreement. This sent PHMD shares 27% higher during afternoon trading, and this reversed a trend which had been lower for most of 2017. Wednesday’s move retraces some of the yearly decline here getting back near 30%. The volume was outsized here as investors digested the news. A look at the chart action below shows the reversal underway during Wednesday’s action.
“We are pleased to further advance our core strategy, which is intended to create value for our investors,” said Suneet Singal, Chief Executive Officer of First Capital. “We are highly supportive of the transaction with First Capital for our shareholder base. We made the decision to shift our business strategy into this sector in view of the opportunities we believe this portfolio of assets will provide,” said Dennis McGrath, Chief Financial Officer of PhotoMedex.
In the first contribution installment, which is expected to close on or about May 17, 2017, First Capital has agreed to transfer to PhotoMedex its interests in four vacant land sites located in Atwater and Merced, California intended for development into gas stations, and its interests in a single family residential development located in Los Lunas, New Mexico.
In consideration for such transfers, First Capital will receive Common Stock and Preferred Stock of PhotoMedex having a value of $10 million, based upon a 7.5% premium above a volume-weighted average price (“VWAP”) of PhotoMedex’s Common Stock (the “Per Share Value”).
First Capital will receive a number of shares of Common Stock equal to up to 19.9% of the issued and outstanding shares of Common Stock of PhotoMedex immediately prior to the initial closing. The balance of the shares will be paid in PhotoMedex’s Preferred Stock, which will be convertible into Common Stock subject to a vote of PhotoMedex stockholders in accordance with the applicable rules of the Nasdaq Stock Market.
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PHMD 10-Day Chart Below:Pursuant to the Agreement, First Capital has also agreed to contribute to PhotoMedex its interests in properties located in Texas and in Antigua, provided that certain conditions set forth in the Agreement are satisfied by December 31, 2017. These interests include First Capital’s interest in a hotel located in Amarillo, Texas and rights it expects to obtain in two development properties in Antigua which are planned for resort development.
In exchange for these interests, and provided that the conditions for the contributions have been satisfied, PhotoMedex will issue shares of its stock to First Capital. Assuming that both the Texas and the Antigua interests are contributed to PhotoMedex, the number of shares to be issued will be determined by dividing $20 million by the Per Share Value. The contributions of the foregoing interests are not interdependent; the interests may be transferred at different times on or prior to December 31, 2017.
Following the closings, First Capital expects to consider the distribution of certain of the shares of PhotoMedex Common Stock it receives to its partners and stockholders, subject to appropriate corporate and other approvals and to compliance with all applicable federal and state securities laws and other applicable laws and regulations. Following the Initial Closing, Suneet Singal, the Chief Executive Officer of First Capital, is expected to be designated as Chief Executive Officer of PhotoMedex. Mr. Singal will continue to serve as Chief Executive Officer of First Capital following the Initial Closing.
PhotoMedex, Inc. a Nevada corporation (NASDAQMKTS: PHMD) has some work to do to get back to even for the year, but Wednesday’s action is good for shareholders who have watched shares sit dormant since December 2016, and this is a welcome upturn. Come back as we learn more about this company and what led to the December rally and why they would approach that level again. For more news on PHMD and other fast-moving penny stocks, please subscribe to OracleDispatch.com below.