Diomed Files Petition Under Chapter 11 of the U.S. Bankruptcy Code, Seeks Sale of U.S. Business to Biolitec AG
March 14 2008 - 10:54AM
Business Wire
Diomed Holdings, Inc. (AMEX: DIO), a leading developer and marketer
of minimally invasive medical technologies, including its patented
EVLT� laser treatment for varicose veins, announced that it,
together with its wholly owned subsidiary, Diomed, Inc., filed a
voluntary petition under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court for the District of
Massachusetts, Western Division. The petition contemplates that
Diomed will sell certain of its operating assets to Biolitec AG, a
manufacturer of medical lasers, optical fibers and other products,
thereby enabling Biolitec to continue to operate Diomed�s business
in the United States. Diomed and Biolitec have entered into a
non-binding letter of intent for the sale of specified assets for a
purchase price of between $6 and $7 million. Biolitec reported
revenues of �39 million and profits of �5.6 for its fiscal year
ended June 30, 2007. Its shares are listed on the Prime Standard of
the Frankfurt Stock Exchange. Biolitec is headquarted in Jena,
Germany, and employs approximately 60 personnel at its U.S.
operations based in East Longmeadow, Massachusetts. �The decision
to pursue the sale of the company�s assets and operations through
the bankruptcy process was an extremely difficult but appropriate
decision for our Board of Directors to make,� commented James A.
Wylie, Jr., Diomed�s Chief Executive Officer. �In spite of our
intensive efforts to seek a buyer for the Company outside of
bankruptcy and to work with our secured lenders to avoid seeking
bankruptcy protection, the impact of infringement of the Company�s
products in the marketplace and delays in the judicial process
proved impossible to overcome,� Wylie stated. �We believe that,
given the ongoing financial and legal challenges facing Diomed,
bankruptcy is the best means available to protect the company�s
assets and allow the company�s operations to be sold through an
orderly process.� With court approval, Diomed will continue
operating in the ordinary course of business as a
debtor-in-possession while it pursues the sale of specified assets
to Biolitec and the sale of its other assets to third parties.
Diomed expects to complete the asset sale to Biolitec within
approximately 60 to 90 days and to sell its remaining assets in due
course, under the court�s direction. These other assets include
judgments in Diomed�s favor of approximately $14.7 million arising
from Diomed�s successful patent infringement litigation in 2007
against defendants AngioDynamics, Inc. and Vascular Solutions, Inc.
This litigation is currently on appeal, under bond, with a hearing
on the appeal scheduled for April 10, 2008 at the appellate court.
Diomed and Biolitec have entered into a non-binding letter of
intent for the sale of specified assets. The letter of intent
contemplates that to fund its operations during bankruptcy, Diomed
will use its cash and receipts and will obtain debtor-in-possession
financing from its senior secured creditor, Hercules Technology
Growth Capital, Inc. If Hercules and Diomed are unable to reach
agreement on the terms of such financing, Biolitec has agreed in
principle under the letter of intent to provide necessary financing
of up to $2 million during the transition period. Such
debtor-in-possession financing will be subject to court approval.
The proceeds of the sale of Diomed�s assets will be distributed to
Diomed�s creditors and equity holders as determined by the
bankruptcy court. With court approval, Diomed expects to complete
the asset sale to Biolitec within approximately 60 to 90 days and
to sell its remaining assets in due course, under the court�s
direction. In a related development, Diomed�s wholly owned
subsidiary, Diomed Limited, has determined to file for
Administration locally under the laws of the United Kingdom,
contemporaneously with Diomed�s bankruptcy filing in the United
States. �We believe that Biolitec�s acquisition of Diomed�s
operating assets and U.S. sales and marketing organization provides
our loyal physician partners the best opportunity for an improved
level of service, flow of new and innovative technologies, and
continuity of supply of lasers and disposable products,� concluded
Wylie. �Finally, I would be remiss if I did not thank each and
every employee of the Company for their loyalty, dedication and
commitment during the last several months. They stood the course
and performed above all expectations during this very difficult
time.� About Diomed Diomed develops and commercializes minimal and
micro-invasive medical procedures that use its proprietary laser
technologies and disposable products. Diomed�s EVLT� laser vein
ablation procedure is used in varicose vein treatments. Diomed also
provides photodynamic therapy (PDT) for use in cancer treatments,
and dental and general surgical applications. The EVLT� procedure
and the Company�s related products were cleared by the United
States FDA in January of 2002. Along with lasers and single-use
procedure kits for its EVLT� laser vein treatment, the Company
provides its customers with state of the art physician training and
practice development support. Additional information is available
on the Company�s website: www.evlt.com. EVLT� is a registered
trademark of Diomed Inc., Andover, MA. Safe Harbor Safe Harbor
statements under the Private Securities Litigation Reform Act of
1995: Statements in this news release looking forward in time
involve risks and uncertainties, including the risks associated
with trends in the products markets, reliance on third party
distributors in various countries outside the United States,
reoccurring orders under OEM contracts, market acceptance risks,
technical development risks and other risk factors. These
statements relate to our future plans, objectives, expectations and
intentions. These statements may be identified by the use of words
such as "may," "will," "should," "potential," "expects,"
"anticipates," "intends," "plans," "believes" and similar
expressions. These statements are based on our current beliefs,
expectations and assumptions and are subject to a number of risks
and uncertainties. Moreover, our bankruptcy filing in the United
States and the concurrent administration filing of our
manufacturing subsidiary in the United Kingdom raise significant
concern as to the reliability going forward of our previous and
current forward-looking statements. The bankruptcy process will
require court approval of, among other things, the contemplated
acquisition of our operating assets by Biolitec AG and
debtor-in-possession financing. Further, given recent developments,
our actual results are likely to differ materially from those
discussed in our previous financial statements. Diomed disclaims
any obligation or duty to update or correct any of its
forward-looking statements.
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