MDI to be purchased by Qatar firm

DOHAR, Qatar—A systems integrator here, Almana Networks, has agreed to merge with long-time software manufacturer MDI, taking over its publicly traded status. Security Systems News has learned, however, that part of the agreement is to spin off a new company, to be called Monitor Dynamics, which will operate the large majority of the former MDI business.

Thus, MDI's former government business with its access control software, its LearnSafe educational security initiative, and its Structure construction-based division will now make up Monitor Dynamics, pending shareholder approval of the deal.

Almana, which operates in both the physical and cyber security realms, will become MDI, Inc., and will immediately generate more income for MDI shareholders, according to a projection in a press release. Almana and MDI have a history of working together that includes a $5 million contract announced last year.

In what's called a triangular merger, the entire MDI employee base and board of directors will resign and give up all claims to employment and compensation, in return for the ability to buy its current business and create Monitor Dynamics for the cost of a $1 million unsecured convertible promissory note.

Essentially, Almana wants to be a public company, with the ability to raise funds that entails, and MDI wants to be a private company, eschewing the costs of being a public company. The deal is expected to close in the third quarter of this year.

According to the release: “As part of the transaction, MDI will receive from the new shareholders a $5 million revolving line of credit. Additionally, Almana Networks will immediately contribute seven contracts to MDI that are projected to result in a combined $8 million in revenue and an estimated $1.2 million in EBITDA for the last four months of 2009. For calendar 2010, Almana Networks has identified projects to be handled by MDI that are projected to provide approximately $61 million in revenue and $12 million in EBITDA.”

Further, “The transaction also contemplates the implementation of a one-for-10 reverse stock split of shares in MDI, which was approved by MDI's shareholders at the November 13, 2008 Annual Shareholder's Meeting.”