Merchant Capital Group has completed the acquisition of all of Trancorp Inc.’s interest in Blue Heron Financial Corp. and @rgentum Management and Research Corp., its wholly owned subsidiary.

Merchant Capital purchased from Trancorp $1,382,000 of first secured debt of @rgentum, $393,000 of unsecured debt and 1,212,139 common shares of Blue Heron for a purchase price of $1,896,442.

In consideration for the acquisition, Merchant Capital issued Trancorp $1.72 million of 14% Series A convertible debentures maturing Dec. 20, 2004.

Jay Richardson, interim chief executive officer of Blue Heron and managing director of Merchant Capital, reported, “The Trancorp debenture represents substantially all of the secured debt of Blue Heron on a consolidated basis and thereby represents the effective controlling financial interest in Blue Heron. The combined abilities of Merchant Capital and Blue Heron represent a comprehensive financial services platform which will be further developed by the two organizations in concert.”

In related news, Merchant Capital issued a further $1.3 million of Series A debentures to a private investment corporation for $1 million in cash and three million common shares of Blue Heron. The cash proceeds will be used, in part, to initiate the capital expenditure program at the company’s wholly owned subsidiary, Applied Carbon Technology.

Finally, in a separate private placement transaction, the company acquired 1.5 million common shares of Blue Heron for a purchase price of $150,000.

Scott Sinclair, president and chairman of Merchant Capital, reported, “Merchant Capital is delighted to be able to jointly announce the acquisition of this significant financial interest in Blue Heron and the start of the capital expenditure program at Applied Carbon Technology. Each of these alone represents major milestones in the development of Merchant Capital and its goal of creating sustainable value for shareholders. Merchant Capital expects further private placement announcements in early 2002.”