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PHOENIX MEDICAL TECHNOLOGY ENTERS INTO STOCK PURCHASE AGREEMENT WITH BRAJATAMA

 PHOENIX MEDICAL TECHNOLOGY ENTERS INTO
 STOCK PURCHASE AGREEMENT WITH BRAJATAMA
 ANDREWS, S.C., April 2 /PRNewswire/ -- Phoenix Medical Technology, Inc. ("Phoenix"), a manufacturer of single use gloves, surgical drapes and scrub and prep sponges, announced today that it has entered into a Stock Purchase Agreement with Brajatama, Inc. ("Brajatama"). On Aug. 2, 1991, Phoenix filed for protection under Chapter 11 of the United States Bankruptcy Code and Phoenix continues to operate as a debtor-in-possession. The Stock Purchase Agreement is subject to the approval of the Bankruptcy Court.
 Under the terms of the Agreement, Brajatama will purchase newly issued shares of Phoenix under a plan of reorganization so that Brajatama will own 80 percent of the issued and outstanding shares of Common Stock of Phoenix on a closing date which shall be no later than Dec. 31, 1992. The Agreement contains certain conditions which must be fulfilled prior to any closing. Brajatama has the right to terminate the Agreement at any time during the first 90 days subject to its obligation to pay Phoenix certain specified amounts. In addition, Phoenix must comply with or fulfill certain representations, warranties and agreements, including performance warranties specified in the Agreement. In the event of a closing, Brajatama will pay Phoenix a specified purchase price and will also lend Phoenix certain additional amounts. The purchase price and loans, which in the aggregate will exceed $4,800,000, are intended to be used to pay Phoenix's creditors (including Phoenix's largest creditor, its bank) and to settle administrative and priority claims under Phoenix's Chapter 11 bankruptcy proceedings.
 Phoenix is preparing a plan of reorganization that will be submitted to the Bankruptcy Court and will require the approval of Phoenix's creditors. There can be no assurance that the Stock Purchase Agreement will be consummated or that a plan of reorganization will be confirmed by the Bankruptcy Court.
 Phoenix continues to receive interim financing from its bank so that it can continue its operations. Phoenix has agreed, subject to approval of the Bankruptcy Court, to enter into a Consent Order with its bank which requires Phoenix to make monthly payments of $40,000 per month plus interest on the 1990 revolving loan with the bank which accrues monthly. The bank has reviewed the Stock Purchase Agreement, and has agreed to accept certain amounts as full payment to release its claims against Phoenix under certain conditions as part of a plan of reorganization.
 Phoenix's management stated that Phoenix and Brajatama will begin to cooperate immediately in certain aspects of their respective businesses. Phoenix will continue to conduct its business in the usual and ordinary course, serving its existing customers and distributors, consistent with past practice. The parties expect to retain the current management of Phoenix, including its President, Edward W. Gallaher, Sr. and its Executive Vice President, Grover C. Mixon.
 Brajatama, Inc. is a California corporation which has been operating since 1988 in San Francisco, Calif. Brajatama is a major importer and distributor of single use latex gloves manufactured in the Far East.
 Shares of Phoenix's no par value Common Stock are currently traded in the over-the-counter market. The shares were delisted from NASDAQ on May 20, 1991.
 -0- 4/2/92
 /CONTACT: Edward W. Gallaher, Sr., President, Phoenix Medical Technology, Inc., 803-221-5100/ CO: Phoenix Medical Technology, Inc.; Brajatama, Inc. ST: North Carolina, California IN: MTC SU: RCN


CM -- CH009 -- 4503 04/02/92 15:34 EST
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Publication:PR Newswire
Date:Apr 2, 1992
Words:567
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