Davstar Obtains $1-Million Loan From Distributor

Davstar Industries Ltd. said Thursday that health products distributor FoxMeyer Health Corp. has loaned it $1 million, secured by new convertible notes, and has agreed to invest an additional $4 million in Davstar convertible preferred stock.

Texas-based FoxMeyer also has agreed to distribute Davstar’s urology products through its national network of Health Mart pharmacies.

In return for its investment, FoxMeyer would own 21% of Davstar’s common stock within three years should it exercise all of its conversion and stock purchase options.

Davstar, based in Costa Mesa, develops, makes and markets products for treatment of urological disorders. Its customers include hospitals, laboratories, nursing homes and the home health care market.

The company’s stock gained 43 3/4 cents a share Thursday to close at $3.50 on the American Stock Exchange. FoxMeyer shares lost 25 cents Thursday to close at $17.75 on the New York Stock Exchange.

Separately, Davstar said Thursday that it has appointed two new directors: Robert N. Elkins, 51, founder, chairman and chief executive officer of Integrated Health Services Inc. in Maryland, and Lawrence Goelman, 54, founder, chairman and chief executive of Cost Care Inc. in Irvine.