Diomed Files Petition Under Chapter 11 of the U.S. Bankruptcy Code, Seeks Sale of U.S. Business to Biolitec AG
ANDOVER, Mass.--(Business Wire)--
Diomed Holdings, Inc. (AMEX: DIO), a leading developer and
marketer of minimally invasive medical technologies, including its
patented EVLT(R) 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 EUR 39
million and profits of EUR 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(R) 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(R) 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(R) 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(R) 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.
Diomed Holdings, Inc.
Christopher J. Geberth
877-434-6633 or 978-824-1816
Vice President Finance
investor-relations@diomedinc.com
Copyright Business Wire 2008
