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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF SECURITIES EXCHANGE ACT OF 1934)
(AMENDMENT NO. )
BIOSEARCH MEDICAL PRODUCTS, INC.
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(Name of the Issuer)
Robert Keller, V.P. C.F.O.
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(Name of Person Filing Statement)
Common Stock
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(Title of Class of Securities)
090660 20 0
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(CUSIP Number of Class of Securities)
ROBERT J. MORAVSIK, GENERAL COUNSEL
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BIOSEARCH MEDICAL PRODUCTS, INC, 35A INDUSTRIAL PARKWAY, SOMERVILLE, NJ 08876
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(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communication on Behalf of Person Filing Statement)
This statement is filed in connection with (Check appropriate box)
a. [X] The filing of solicitation materials or an
information statement subject to Regulation
14A, Regulation 14C, or rule 13E-3(c) under
the Securities Exchange Act of 1934.
b. The filing of a registration statement under the Securities
Act of 1933.
c. A tender offer.
d. None of the above.
Check the following box if the soliciting materials of information
statement referred to in checking box (a) are preliminary copies. [_]
Calculation of Filing Fee
Transaction valuation* Amount of Filing Fee
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$440, 576 1/50 of 1% $88
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[_] Check box if any part of fee is offset as provided by Rule 0-11 (a)(2) and
identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount previously paid:____________ Filing party:_____________
Form or registration No.:___________ Date filed:_______________
Instruction. Eight copies of this statement, including all exhibits,
should be filed with the commission.
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
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CROSS REFERENCE SHEET
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ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION
(c) See Section II in Proxy Statement of Biosearch Medical Products, Inc.
(hereinafter, the "Proxy Statement"), subsection entitled "Share Price of
Company" incorporated by reference herein.
(e) Not applicable.
(f) Not applicable.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
Not applicable
ITEM 4. TERMS OF THE TRANSACTION.
(a) See Section II of the Proxy Statement, subsection entitled "Summary of
Material Features of this Exchange" incorporated by reference herein.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(g) Not applicable.
ITEM 6. SOURCE AND AMOUNTS OF FUNDS AND OTHER CONSIDERATION.
(d) not applicable.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND FACTS
(a) See Section II of the Proxy Statement, subsection entitled "Reason for this
Transaction," incorporated by reference herein.
(b) See Section II of the Proxy Statement, subsection entitled "Reason for this
Transaction," incorporated by reference herein.
(c) See Section II of the Proxy Statement, subsections entitled "Summary of
Material Features of this Exchange," "Reason for this Transaction,"
"Federal Income Tax Consequences," and "Biosearch Medical Products, Inc.
will go Private," incorporated by reference herein.
ITEM 8. FAIRNESS OF TRANSACTION.
(b) See Section II of the Proxy Statement, subsections entitled "Book Value of
the Company," "Share Price of Company," and "Price of Securities Before And
After Public Announcement on May 13, 1999," incorporated by reference
herein.
ITEM 9. REPORTS, OPINIONS, APPRAISALS, AND CERTAIN NEGOTIATIONS.
(a) See Section II of the Proxy Statement, subsection entitled "Fairness
Opinion" and Exhibit B to Proxy Statement, incorporated by reference
herein.
(b) 1. See Section II of the Proxy Statement, subsection entitled "Fairness
Opinion" and Exhibit B to Proxy Statement, incorporated by reference
herein.
6. See Section II of the Proxy Statement, subsection entitled "Fairness
Opinion" and Exhibit B to Proxy Statement, incorporated by reference
herein. No limitations were imposed upon WVA.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES.
See Section II of the Proxy Statement, subsection entitled "Summary of Material
features of this Exchange," incorporated by reference herein.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH RESPECT TO
THE TRANSACTION.
(a) See Section II of the Proxy Statement, subsection entitled "Intentions of
Certain Persons," incorporated by reference herein.
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(b) See Section II of the Proxy Statement, subsection entitled "Intentions of
Certain Persons," incorporated by reference herein.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) See Section II of the Proxy Statement, subsections entitled "Right of
dissent/appraisal," and "Shareholders Protection Act," incorporated by
reference herein.
ITEM 14. FINANCIAL INFORMATION.
(a) See the Issuer's Annual report on Form 10-K SB-A for the fiscal year ended
December 31, 1998 and the Issuers Quarterly Report on Form 10-Q SB for the
quarter ended March 31, 1999, incorporated by reference.
(b) Not applicable.
ITEM 15. PERSONS AND ASSETS EMPLOYED RETAINED OR UTILIZED.
(a) See Section II of the Proxy Statement, subsection entitled "Reason for this
Transaction" and "Summary of Material features of this Exchange,"
incorporated by reference herein. The Issuer anticipates that its
employees, assets will be utilized in the same manner after the Exchange as
they were before the transaction.
ITEM 16. ADDITIONAL INFORMATION.
Not applicable.
<PAGE>
Rule 13e-3 Transaction Statement
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ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a) Biosearch Medical Products, Inc. 35A Industrial Parkway, Somerville, NJ
08876.
(b) Common Stock, no par value (hereinafter the "Common Stock") 2,202,878
shares issued and outstanding as of June 3, 1999 approximately 600
shareholders of record as of June 3, 1999.
(c) See Section II in Proxy Statement of Biosearch Medical Products, Inc.
(hereinafter, the "Proxy Statement"), subsection entitled "Share Price of
Company" incorporated by reference herein.
(d) No dividends have been paid in the last two years.
(e) Not applicable.
(f) Not applicable.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is being filed by the issuer of the class of equity securities
subject to this Rule 13e-3 transaction.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
Not applicable.
ITEM 4. TERMS OF THE TRANSACTION.
(a) See Section II of the Proxy Statement, subsection entitled "Summary of
Material Features of this Exchange" incorporated by reference herein.
(b) i. All holders of issued and outstanding shares of Common Stock are
treated equally.
ii. Exercisable options to purchase shares of Common Stock which have an
exercise price of less than $.20 will be paid the difference between
the exercise price and $.20 in cash. Options to purchase shares of
Common Stock which have an exercise price equal to or greater than
$.20 will be extinguished.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a) through (e) inclusive: No such plans or proposals.
(f) The Common Stock will be eligible for termination of registration.
(g) Not applicable.
ITEM 6. SOURCE AND AMOUNTS OF FUNDS AND OTHER CONSIDERATION.
(a) The cash reserves of Hydromer Inc., the acquiror, will be used to fund the
exchange price and legal fees ($450,576). The balance of expenses ($32,688)
will be funded by the issuer from working capital. The total amount of
funds is estimated to be $486,264.
(b) Itemized expenses
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$440,576 - Exchange price of Common Stock
25,000 - Fairness Opinion
2,000 - Accounting
10,000 - Legal
2,000 - Printing
3,600 - Proxy Solicitation
3,000 - Transfer Agent fees
88 - filing fee
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$486,264 - Total
(c) None of the above funds will be borrowed.
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(d) Not applicable.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND FACTS.
(a) See Section II of the Proxy Statement, subsection entitled "Reason for this
Transaction,"incorporated by reference herein.
(b) The Issuer sought unsuccessfully to raise the additional capital necessary
for marketing its products. See Section II of the Proxy Statement,
subsection entitled "Reason for this Transaction," incorporated by
reference herein.
(c) See Section II of the Proxy Statement, subsections entitled "Summary of
Material Features of this Exchange," "Reason for this Transaction,"
"Federal Income Tax Consequences," and "Biosearch Medical Products, Inc.
will go Private," incorporated by reference herein.
ITEM 8. FAIRNESS OF TRANSACTION.
(a) The issuer believes that this transaction is fair to unaffiliated security
holders. Manfred F. Dyck, Director of the Issuer, absented himself from
discussions of the transaction and abstained from voting on the transaction
because of his security holdings in Hydromer, Inc., the acquiror.
(b) The exchange price represents a premium over the current market price of
the Common Stock for most of the last two years and a substantial premium
over the book value of the Issuer. The Board of Directors of the Issuer
engaged a valuation expert who reviewed the transaction and gave his
opinion that the transaction was fair to the shareholders of the Issuer.
See Section II of the Proxy Statement, subsections entitled "Book Value of
the Company," "Share Price of Company," and "Price of Securities Before And
After Public Announcement on May 13, 1999," incorporated by reference
herein.
(c) The transaction does not require the approval of a majority of unaffiliated
security holders but can be passed by a simple majority of all shareholders
who vote.
(d) No such representative was retained.
(e) The transaction was unanimously approved by the directors who are not
employees of the Issuer.
(f) No such offers were received by the Issuer.
ITEM 9. REPORTS, OPINIONS, APPRAISALS, AND CERTAIN NEGOTIATIONS.
(a) The Issuer has received a fairness opinion from Wharton Valuation
Associates, Inc. ("WVA") See Section II of the Proxy Statement, subsection
entitled "Fairness Opinion" and Exhibit B to Proxy Statement, incorporated
by reference herein.
(b) 1. See Section II of the Proxy Statement, subsection entitled "Fairness
Opinion" and Exhibit B to Proxy Statement, incorporated by reference
herein.
2. See proposal letter of WVA and representative transactions annexed as
Exhibit 1 to this Statement.
3. WVA was interviewed directly by the Board of Directors of the Issuer.
4. WVA has no material relationship to the issuer or its affiliates, and
no compensation is to be received by WVA except for its engagement
fee.
5. The amount of consideration was negotiated by the Issuer with the
advice of WVA.
6. See Section II of the Proxy Statement, subsection entitled "Fairness
Opinion" and Exhibit B to Proxy Statement, incorporated by reference
herein. No limitations were imposed upon WVA.
(c) The Fairness Opinion is annexed to the Proxy Statement, and will be
distributed to shareholders of the Issuer. In addition, the fairness
Opinion will be made available for inspection and copying at the principal
executive offices of the Issuer during regular business hours by any
interested equity security holder of the Issuer or his representative who
has been so designated in writing. A copy of the Fairness Opinion will be
transmitted by
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the Issuer to any interested equity security holder of the Issuer or his
representative who has been so designated in writing, without charge.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a) Not applicable.
(b) Not applicable.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES.
See Section II of the Proxy Statement, subsection entitled "Summary of Material
features of this Exchange," incorporated by reference herein.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH RESPECT TO
THE TRANSACTION.
(a) See Section II of the Proxy Statement, subsection entitled "Intentions of
Certain Persons," incorporated by reference herein.
(b) See Section II of the Proxy Statement, subsection entitled "Intentions of
Certain Persons," incorporated by reference herein.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) See Section II of the Proxy Statement, subsections entitled "Right of
dissent/appraisal," and "Shareholders Protection Act," incorporated by
reference herein.
(b) No provision has been made to allow unaffiliated security holders to obtain
access to the corporate files of the Issuer or to obtain counsel or
appraisal services at the expense of the Issuer.
(c) Not applicable.
ITEM 14. FINANCIAL INFORMATION.
(a) See the Issuer's Annual report on Form 10-K SB-A for the fiscal year ended
December 31, 1998 and the Issuers Quarterly Report on Form 10-Q SB for the
quarter ended March 31, 1999, incorporated by reference herein.
(b) Not applicable.
ITEM 15. PERSONS AND ASSETS EMPLOYED RETAINED OR UTILIZED.
(a) See Section II of the Proxy Statement, subsection entitled "Reason for this
Transaction" and "Summary of Material features of this Exchange,"
incorporated by reference herein. The Issuer anticipates that its
employees, assets will be utilized in the same manner after the Exchange as
they were before the transaction.
(b) No persons will be employed, retained or compensated by the Issuer or any
affiliate to make solicitations or recommendations in connection with this
transaction.
ITEM 16. ADDITIONAL INFORMATION.
Not applicable.
ITEM 17. EXHIBITS.
Exhibit 1. Proposal letter and representative transactions of Wharton Valuation
Associates.
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November 6, 1998
Mr. Robert C. Keller
Vice President Finance
Biosearch Medical Products Inc.
35A Industrial Parkway
Somerville, NJ 08876
Dear Mr. Keller
Thanks very much for taking the time to meet with Andrew Shaiman and me last
week. As requested, I am outlining the terms and conditions by which Wharton
Valuation Associates, Inc. ("WVA") would be willing to render an opinion with
respect to the financial fairness of a proposed merger between Biosearch Medical
Products Inc. ("BMPI") and Hydromer Inc. ("HYDI"). Our opinion would rendered
from a financial point of view from the perspective of BMPI's shareholders.
BIOSEARCH MEDICAL PRODUCTS, INC. ("BMPI")
BMPI was incorporated in the State of New Jersey on September 17, 1975. The
Company's early emphasis was on contract research and development of medical
devices and systems for larger medical product companies. During 1982 the
Companysuccessfully made its finitial public offering of equity securities. The
Company had designed and successfully marketed under its own Dobbhoff (R)
trademark, a smallbore feeding catheter which quickly became the enteral
industry's feeding device standard. Related products followed.
The dominance of the enteral food market by larger medical product companies and
reimbursement changes in the Federal Government Medicare System prompted the
Company's decision to reassess its business objectives. The Company subsequently
curtailed its selling activities in the alternate care market and in August
1989, laid off its dietary sales force. During 1994, BMPI entered into
agreements with Sherwood Medical Company which formed with them a strategic
business alliance. In 1997 sales of contracted manufactured products were
approximately 80 percent of total sales.
BMPI's revenues have declined from approximately $20 million in the late 1980's
to under $2 million in 1997, while operating losses have been reduced from
($842,004) in 1995 to ($493,367) in 1997 through vigorous cost cutting efforts.
The Company's balance sheet showed a total shareholsers' equity of $940,146 at
December 31, 1997. There are currently discussions underway with a large medical
products company which could well lead to sharply higher sales and earnings over
the near term.
WHARTON VALUATION ASSOCIATES, INC. ("WVA")
WVA is a consulting firm engaged primarily in the valuation of business
interests and also in providing advice in connection with mergers, acquisitions,
divestitures and similar capital transactions. Although the firm has been in
existence for eight years, its managing directors have a combined total of more
than 60 years of experience performing valuations and acting as financial
advisers to corporations and their shareholders. Our valuations are performed in
connection with a variety of planning and transactional applications, including:
mergers, acquisitions and divestitures; initial public securities offerings;
private placement of debt and equity; employee stock ownership and incentive
stock option plans; bankruptcies, reorganizations and recapitalizations; estate,
gift and income tax planning and compliance; litigation involving business and
securities valuation issues; and general corporate and shareholder planning.
Neither WVA nor any of its employees has any interests in the Proposed
Transaction which would compromise its ability to render an opinion with respect
to the Proposed Transaction in a totally objective and disinterested fashion. In
this connection, the fee for our services would in no way be contingent on the
value or on a favorable opinion regarding the fairness of the Proposed
Transaction.
PROPOSAL
We would be willing to render an opinion with respect to the financial fairness
to BMPI's shareholders of the Proposed Transaction for a fee of between $25,000
and $30,000, plus actual out-of-pocket data acquisitions expenses (if any). As
noted above, the fee for this service would be contingent on our conclusion with
respect to financial fairness. Our opinion would be transmitted in the form of a
letter, altough we would make ourselves available to discuss with BMPI's Board
of Directors the basis for our conclusion.
We appreciate very much being given the opportunity to propose on this project.
If you have questions regarding any aspect of the foregoing, please let me know.
If the terms of this Proposal are acceptable, please sign this letter below and
return to my attention.
Sincerely,
Jeffery Nelson s/s
Managing Director
Wharton Valuation Associates, Inc.
<PAGE>
Exhibit 2. Audited balance sheets, unaudited balance sheets; ratio of
earnings to fixed charges and book value per share as required by
Item 14. See the Issuer's Annual report on Form 10-K SB-A for the
fiscal year ended December 31, 1998 and the Issuers Quarterly
Report on Form 10-Q SB for the quarter ended March 31, 1999,
incorporated by reference herein. See the Proxy Statement Section
II "BOOK VALUES" for a table of Book Values also incorporated by
reference herein. Issuer has had no earning for the past 10 years
hence its ratio of earnings to fixed charges is not relevant.
SIGNATURE
________________________________
(Date)
________________________________
Robert Keller
Vice President, Chief Financial Officer
