Wismer Martin Selling Stock To Relieve Financial Difficulties

Martin Corp. is preparing a $2 million offering of common stock to help it through current financial difficulties, shareholders learned Tuesday at the company’s annual meeting.

Ivory and Sime Ltd., an investment company based in Scotland, and Medical Services Corp. of Eastern Washington have already stepped forward to buy significant portions of the offering, according to Ron Holden, Wismer Martin’s chief executive officer.

Holden said cash from the offering will not be available for at least 60 days, but Wismer Martin will be able to weather the wait.

“We need a cash infusion shortly, and that infusion will occur,” Holden said after the meeting. “But with its existing line of credit and with cash generated by current operations, the company will have more than enough financial resources to take it to completion of the offering.”

Shareholders also learned that Wismer Martin is involved in ongoing discussions with GTE regarding a “strategic alliance” between the Spokane-based software company and the telecommunications giant.

“GTE is exploring with us the possibility of putting our product in their (portfolio),” Bill Campbell, the company’s executive vice president of Network operations, told shareholders.

Sources close to the GTE talks, which have been under way for several months, say the discussion has ranged from a simple product relationship to GTE’s acquisition of an equity position in the company.

Holden said he could not comment on the exact nature of the GTE discussions.

Holden - who owns 52 percent of Wismer Martin’s stock and is chairman of the board - also said the company will suffer a loss “in the $500,000 range” for the third quarter, which ends March 31. That backs onto a record $700,000 loss in the second quarter.

“But I’m confident we will see a return to profitability in the fourth quarter,” Holden said.

Normally, a Wismer Martin annual meeting is a sedate affair featuring a handful of corporate officers and about 10 shareholders, but Tuesday’s meeting was packed. More than 100 shareholders, some anxious and some angry, gathered to hear Holden’s account of a turbulent couple of weeks in which several key executives have left the company, and a two-month plunge that has seen the stock drop from about $3 to about $1 a share.

Longtime company president Stan Hatch resigned last week as the result of a disagreement with Holden over several issues, including Wismer Martin’s acquisition of another Hol den company, Integrated Health Systems. IHS has suffered heavy losses since the acquisition, and those losses have contributed significantly to Wismer Martin’s current financial difficulties.

Several other key executives left the company last week, and some Wismer Martin customers and potential customers became nervous about the company’s ongoing viability.

Holden told shareholders Tuesday, though, that the company had not lost any of its major customers, and that two key deals involving health care providers in California and Kentucky were proceeding toward completion.

Holden said the board of directors decided to change management teams because of “danger signs” that were evident during the past year. He said negative perceptions of those events are harming the company.

“But we are dealing with perceptions,” he said, “and not fundamental characteristics” of the company.

Holden said the board has named John Perez president and chief operating officer of Wismer Martin.

Perez was previously president of IHS, and one shareholder questioned his appointment on the basis of IHS’s struggles during the past year.

“If he did such a poor job there, why are we putting our eggs in his basket?” the shareholder asked Holden.

Holden said the board of directors explored that issue, but said it decided to hire Perez after learning that IHS’s current quarter would be profitable “despite some very trying circumstances.”

Perez told the shareholders that the future of the company is in combining its health care information network expertise with the telecommunications expertise of companies like GTE to provide for broader management of information both inside and outside the health care industry.

Holden assured the shareholders that he believes in the company and is committed to its future.

“The thing that makes this company so unique,” Holden said, “is its position in the health care business and the telecommunications industry. We know more about where those two disciplines intersect than anybody else in the country.

“And I think you’re going to see some very big companies come in and try to obtain that expertise.”