Medical Facilities Completes Financing and Acquisition of Oklahoma Spine Hospital

On June 21, 2005, Medical Facilities Corporation (MFC) completed the first subsequent offering (and first bought deal) of income participating securities, issuing 5,420,000 IPSs at C$13.25 per IPS for gross proceeds of C$71,815,000. The proceeds of the offering were used to finance the acquisition of a 51 per cent interest in the Oklahoma Spine Hospital (OSH) for a purchase price of approximately US$44.1 million. The physician-owners of OSH retained a 49 per cent interest (14 per cent exchangeable for IPS units and 35 per cent non-transferable).

OSH is a specialty hospital located in Oklahoma City, Oklahoma that provides advanced medical and surgical treatment for patients suffering from disorders of the spine and chronic pain. MFC owns a 51 per cent interest in four centres, each of which is a specialty surgical hospital located in the US.

The offering of IPSs was underwritten by a syndicate of underwriters led by BMO Nesbitt Burns Inc. that included TD Securities Inc., RBC Dominion Securities Inc., Canaccord Capital Corp. and Sprott Securities Inc. The balance of the net proceeds will be retained by the Company for general corporate purposes, including pursuing future acquisitions.

Medical Facilities and its subsidiaries were represented by Goodmans LLP with a team that included Neill May, Matt Angus, Simon McGrath, Brad Ross and Piran Thillainathan (corporate/securities) and Jon Northup (tax); and in the US by Hodgson Russ LLP with a team that included Richard Raymer (corporate), Carol Fitzsimmons (tax) and Sharon Kelly (regulatory), and by McKinney & Stringer, PC with a team that included Martin Stringer and Christopher Heroux (corporate).

The underwriters were represented by Borden Ladner Gervais LLP with a team that included Bill Sirett, Gord Raman, Dyana McLellan and Andrew Peel (corporate) and Robert Kopstein (tax); and in the US by Paul, Weiss, Rifkind, Wharton & Garrison LLP with a team that included Richard Bronstein and John Lynch.

OSH was represented by McAfee & Taft with a team that included Michael Joseph, Jennifer Wheeler, Stephen Hetrick and Spencer Haines.