HearUSA divests Canadian subsidiary for $23.7 million

HearUSA has also licensed certain software and intellectual property for the purposes of the continued conduct of the Canadian business and agreed not to compete in Canada for five years after the sale.

In connection with the sale, HearUSA entered into an 18 month support and transition services agreement with the purchaser, a privately held Canadian entity which has formed a new company, Helix Hearing Inc, to consummate the transaction.

HearUSA will receive monthly payments totaling $1.16 million over an 18 month period for providing software support services and quarterly payments totaling approximately $331,000 over a 12 month period for providing transition support services.

HearUSA sold the $1.16 million of the total monthly payments to be received for software support services to a third party for $1.11 million at closing. The amounts received under the support and transition services agreement will be included in the net income of HearUSA over the respective terms of the agreement.

HearUSA expects proceeds of approximately $20 million in cash from these transactions after the settlement of the remaining Canadian liabilities, taxes, transaction costs and closing adjustments. The company expects to use approximately 50% of these funds to pay down debt under its acquisitions line of credit.

Stephen Hansbrough, chairman and CEO of HearUSA, said: “This divestiture is a key component of our strategy in 2009 to focus our resources entirely on the opportunities we have identified in the US. By significantly increasing working capital and improving our balance sheet, we have addressed current needs and positioned the company to maximize the opportunities previously announced. This includes acquisitions in the US at a time which has never been more favorable.”