Under the terms of the securities purchase agreement, Accelmed would purchase $25 million of Cogentix Medical common stock from the Company at $1.55 per share, a 29% premium over the closing price of the stock on September 6, 2016 and a premium of 36% over the average closing price over the last 30 days.
The securities purchase agreement is subject to various closing conditions, including approval by the shareholders of Cogentix Medical. Accelmed is a premier capital resource for the medical device industry and is based in New York, NY and Hertzeliya, Israel.
Cogentix would apply the proceeds to working capital as well as the implementation of a business development strategy to acquire growth technologies addressing the urology market.
As a condition to Accelmed closing the equity investment, the Company will convert into common shares all the outstanding debt and accrued interest owed to Lewis C. Pell, one of the Company's Class I directors.
Cogentix currently owes a total of $29.5 million ($28.5 million of principal and $1.0 million of accrued interest) to Mr. Pell. The Company and Mr. Pell have entered into a definitive agreement under which the debt owed by Cogentix to Mr. Pell will be converted into Cogentix common stock at a price per share of $1.67 immediately prior to closing the Accelmed securities purchase agreement.
The agreement also provides that, simultaneously with the conversion of such debt, all outstanding warrants to purchase Cogentix common stock that are held by Mr. Pell will be cancelled. The agreement with Mr. Pell is subject to approval of the shareholders of Cogentix Medical.
"The proposed transaction with Accelmed has the ability to transform Cogentix Medical," said Darin Hammers, President and CEO of Cogentix Medical.
"While our team has been successfully executing our sales strategy and building our business in the urology market, we have been resource constrained in terms of providing our sales organization with additional products to bring to our growing customer base.”
“Accelmed is one of the world's leading private equity firms focused on the medical device industry, and as Israel's largest med-tech investor, has a proven track record of integrating Israeli technologies into established US med-tech companies.”
Upon closing of the proposed transactions, there would be approximately 60.3 million shares of common stock outstanding of which Mr. Pell would own approximately 33% and Accelmed would own approximately 27%. The current debt and accrued interest outstanding of $29.5 million would be eliminated and Cogentix would have approximately $28 million of cash and marketable securities.
Cogentix Medical, Inc., headquartered in Minnetonka, Minnesota, with additional operations in New York, Massachusetts, The Netherlands and the United Kingdom, is a global medical device company.
We design, develop, manufacture and market products for flexible endoscopy with our unique product lines featuring a streamlined visualization system and proprietary sterile disposable microbial barrier, known as EndoSheath technology, providing users with efficient and cost effective endoscope turnover while enhancing patient safety.
We also commercialize the Urgent® PC Neuromodulation System, an FDA-cleared device that delivers percutaneous tibial nerve stimulation (PTNS) for the office-based treatment of overactive bladder (OAB). OAB is a chronic condition that affects approximately 42 million U.S. adults.
