Premier Laser Nets $20 Million on New Stock

IRVINE — Premier Laser Systems Inc., riding high on demand for its dental lasers, said it has received more than $20 million from investors who have voluntarily exercised warrants to buy the company’s stock.

The warrants, which allow stock to be purchased later at a specified price, were issued when the company had public offerings in 1994 and 1996. Warrant-holders started buying up the stock after the announcement last month that Irvine-based Premier had received federal approval to begin selling a dental laser used to remove tooth decay.

The news, heralded as a major breakthrough in dentistry that could usher in an era of relatively painless cavity repair, fueled a rise in Premier’s stock to record levels.

With the company’s stock now trading well above the exercise prices, those investors have now realized a tidy profit--at least on paper.

The exercise of the warrants also provides Premier with some needed cash at a time when orders are piling up for its new lasers. Premier Chief Executive Colette Cozean said the medical laser company now has no need for additional working capital to support its increased manufacturing, inventory and delivery schedule.

“The money we are receiving from the warrant exercises should position us to expand our efforts on several fronts, including dentistry and ophthalmology,” Cozean said.

The company began shipping its first dental laser system approved for use directly on teeth last month, and expects to send out up to two dozen units in June. It said that as many as 400 systems can be manufactured by the end of March 1998.

Premier spokesman Owen Daley said that since the announcement by the Food and Drug Administration that it had approved the laser system for use on hard tissue, the company has been swamped with 150 calls a day from dentists. “They’ve burned the phone lines down,” he said.

Although Premier already had enough cash on hand to handle the intense demand for the new lasers, Daley said, the extra funds will help the company with its plans to develop and market other lasers.

“Right now, that $20 million will come in handy to help finance not only the balance sheet, but more important, the growth in medical and dental lasers in areas other than hard tissue for teeth.”

Michael Hiebert, Premier’s chief financial officer, said that about 1.5 million Class A warrants and 1.3 million Class B warrants have been exercised during the last three weeks. Holders of Class A warrants are entitled to purchase Premier stock at $6.50 a share, while Class B warrants are exercisable at $8 a share.

Premier’s stock closed on Monday at $12.4375 a share, up 68.75 cents, in Nasdaq trading.

Scott Baily, a senior analyst at BlueStone Capital Partners in New York, called the cash infusion “an important positive development” for Premier.

There is often concern when large numbers of warrants are exercised that they will dilute a company’s stock by increasing the number of shares in the marketplace, Baily said.

The recent exercise of warrants has resulted in the number of shares of Premier stock outstanding increasing by about 2.8 million to a total of 10.1 million.

“But in the case of Premier,” he said, “the market is so large and they have such a head start on the competition, it’s important that they have the working capital to fund the growth.”