Wismer Martin Clears Away Debt Proceeds From Stock Offering Restore Firm’s Positive Net Worth

A stock offering made by Wismer Martin Corp. earlier this year has cleared much of the company’s debt, taking it from a negative net worth of $1.5 million to a positive net worth of about $1.8 million.

Ronald L. Holden, the company’s chief executive officer and board chairman, highlighted the reduction of debt Tuesday at Wismer Martin’s annual meeting.

“What we attempted to do with this money,” Holden told a handful of shareholders, “was clean up the balance sheet.”

The Spokane-based medical software company, which has struggled for survival during the past year, offered about 6 million shares, of which about 5.5 million were sold. Most of the shares were acquired by Holden in the conversion of about $2.5 million in debt to stock.

Holden said all of the company’s convertible debt, about $3 million, was removed by the offering.

The offering also raised about $800,000 in cash, which was applied to paying down the company’s line of credit with Seafirst Bank.

“Our operating line of credit with Seafirst was at a level of about $1.1 million six to eight months ago,” Holden said. “Today, it is at $200,000.”

The reduction of debt eases pressure from Seafirst, which required the company to reduce debt and raise capital under threat of foreclosure on the company’s property.

For the year, the company lost almost $1.4 million on sales of $10.5 million. That compares with a profit of $700,000 on sales of $14.4 million in fiscal 1994.

Holden also indicated to shareholders that the company continues to find a buyer, and in response to shareholder questions, he did not rule out the possibility that Electronic Data Systems might still have an interest in acquiring Wismer Martin.

Last month in federal court, Wismer Martin successfully blocked EDS’s acquisition of three Health Care Information Networks owned by Blue Cross of Washington and Alaska. Wismer Martin claims that EDS used confidential information it obtained from Wismer Martin in making its bid to Blue Cross. The information was obtained, Holden said, when EDS and Wismer Martin discussed an acquisition last year.

Wismer Martin fears that EDS’s acquisition of the Blue Cross networks will cut Wismer Martin out of the deal. Wismer Martin assisted Blue Cross in establishing the networks. Holden said the dispute is scheduled to be decided in a federal trial set to begin in 60 to 90 days.

But, Holden said, all three parties are negotiating to try to come to some agreement short of trial.

“There is a real negative here,” Holden said, “because EDS is a big outfit. It’s easy for them to put out the word with other big vendors not to buy from us.”

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