CML HealthCare Acquires American Radiology Services

On February 29, 2008, CML HealthCare Income Fund (“CML HealthCare”) completed its previously announced acquisition of Baltimore, Maryland-based American Radiology Services, Inc. (“ARS”) through the acquisition of its holding company ARS Holding, Inc., for total consideration of approximately US$150.4 million. The acquisition was funded with CML HealthCare's new $450 million credit facility from The Toronto-Dominion Bank. The credit facility provided term facilities of $350 million to fund the acquisition of ARS and to prepay CML Healthcare's $190 million senior secured notes, as well as a $100 million revolving credit facility for general corporate purposes, including future acquisitions. President and Chief Executive Officer Robert Carfagno and Chief Financial Officer John Rodgers retained an approximate US$0.6 million equity interest in ARS.

ARS is a leading provider of fully integrated diagnostic medical imaging services and performs approximately 2.2 million medical imaging interpretations per year in conjunction with The Johns Hopkins University and The Johns Hopkins Health System Corporation (collectively “Johns Hopkins”). ARS, through an exclusive, long-term management services contract with American Radiology Associates, P.A., has access to approximately 70 radiologists and has access to additional radiologists through its affiliation with Johns Hopkins. As part of the Acquisition, CML HealthCare, ARS Holding and Johns Hopkins have agreed to enter negotiations to amend the terms of the future relationship among the parties, which could include further initiatives and opportunities in diagnostic medical imaging.

CML Healthcare was represented by Goodmans LLP with a team that included Ken Wiener, Victor Liu, Brad Ross, and Meenu Khindri (corporate), Jeffrey A. Citron and Greg Aronson (banking), Mitch Sherman and Marisa Wyse (tax) and Scott Bell (research); and in the US by Arnold & Porter LLP with a team that included Steven Kaplan, Susan Morita, Benjamin Danner (corporate) John Gatmaitan (banking), Greg Levine (regulatory) and Paul Freshour (employment).

ARS was represented by Pepper Hamilton LLP with a team that included Julie Corelli, Matthew Gilman, Rebecca Oliver-Remshifski, Sadeeka Scott and Thao Le (corporate). Theodore Segal of DLA Piper US LLP represented ARS management.

Fasken Martineau DuMoulin LLP represented The Toronto-Dominion Bank with a team that included Jon Holmstrom, John Elias and David Johnson (banking & finance). Weil, Gotshal & Manges acted as US counsel to TD with a team that included Marsha Simms and Justin Forlenza (banking) and Jeffrey Nadler (corporate).