Rapidly growing Latino Health Care is going public in a complicated financing scheme that will make it the largest Latino public health care company in the nation.

The Long Beach-based individual practice association's (IPA) financing plans combine a $5 million private placement with a reverse shell merger.

The company wants to sell 2 million shares of its management corporation at $2.50 per share to finance a tripling of its 30,000 membership over the next 18 months through the purchase of other practice associations in Californi and elsewhere.

The reverse shell process involves merging the management corporation with a dormant, but still publicly traded company. That means the new investors will be able to publicly trade their shares after a one-year holding period.

(The name of the shell cannot be legally disclosed under Securities and Exchange Commission rules until the merger is complete, which the company expects shortly.)

The financing method was chosen after the company decided it was too small for an initial public offering. "To find an underwriter to do an IPO with the size of the company would have been difficult," said Michael Fisher, the company's investment banking consultant.

Latino Care was founded five years ago by health care administrator Jose Gonzales and Dr. Roberto Chiprut, a physician who had studied how Latinos prefer to receive health care.

The result was a physician management company catering to Latinos that features independent Spanish-speaking physicians working out of small neighborhood offices rather than large clinics.

While more than 100 medical groups have gone belly up in California over the last few years, Latino Care has grown from 1,000 enrollees to just over 30,000. They are served by 370 primary care physicians.

It is now the largest IPA targeting Latinos in the regio. Once the merger is completed, officials say it will be the nation's largest Latino public health care company. It ranks 312th on Hispanic Business magazines of top Hispanic-owned businesses in the United States.

But now Gonzales, president and chief executive, has bigger plans, which involve buying other IPAs that may not meet new solvency requirements.

"It was time to expand," said Gonzalez, who cited demographic data indicating Latinos are one of the fastest growing ethnic groups throughout the United States.

Gregory Range, managing director and head of the Los Angeles office of Duff & Phelps, LLC, said one of the biggest benefits of going public is the cash raised through the IPO, which also raises the company's visibility to the investment community.

Companies that use a reverse shell merger can be almost invisible to investors, while still bearing all the costs of a public company. "I'm not a fan of reverse shell mergers," Range said. "They are a challenging way to go."

But company officials say that going public is an enticement for the private placement's investors, who otherwise would have little liquidity. Being public also provides easier access to the equity markets.

The company began marketing its private placement in May to professionals and other potential investors, and so far has secured $1.2 million in oral commitments, Fisher said. The company has until Aug. 31 to sell the shares, which are being sold in minimum 4,000-share blocks priced at $10,000.

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