All-Stock Combination Creates New Company
with Expanded Product Offerings in Urology
Conference Call Today at 11:00 AM
EST
Uroplasty, Inc. (Nasdaq:UPI) and Vision-Sciences, Inc.
(Nasdaq:VSCI) entered into a definitive merger agreement under
which the two companies will combine in an all-stock transaction to
create a new company expected to generate revenue of approximately
$50 million for the fiscal year beginning April 1, 2015.
Under the terms of the agreement, which was unanimously approved
by the boards of directors of both companies, each outstanding
share of Uroplasty's common stock will be exchanged for 3.6331
shares of Vision-Sciences' common stock. Upon completion of the
merger, Uroplasty shareholders will own 62.5% of the shares of the
combined company on a fully-diluted basis, and Vision-Sciences
shareholders will own 37.5%.1
Following the closing of the transaction, which is expected to
occur during the first half of 2015, the combined company will
conduct business as Cogentix Medical, Inc. (Nasdaq:CGNT). The
combined company will have its U.S. headquarters in Minnetonka, MN,
where Uroplasty's current headquarters is located. Cogentix
Medical will be led by Rob Kill, who will become President and
Chief Executive Officer; Brett Reynolds, who will become Chief
Financial Officer; and Darin Hammers, who will become Senior Vice
President of Global Sales and Marketing. Cogentix Medical's
board of directors will be comprised of the five representatives
from Uroplasty's existing board and three representatives from
Vision-Sciences' existing board.
The merger of Uroplasty and Vision-Sciences will create a
medical device company positioned for growth with proprietary,
innovative technologies serving the urology market. In
addition to the minimally-invasive Urgent PC and Macroplastique
product lines, Uroplasty's 44 person U.S. sales organization, along
with Vision-Sciences' 12 person U.S. sales organization, will
aggressively market Vision-Sciences' proprietary EndoSheath
technology platform. Internationally, the combined company's
products will be sold through Uroplasty's eight direct sales
representatives as well as the current distributors of both
companies.
EndoSheath Endoscopy, which combines state-of-the-art
endoscopic technology with a sterile, disposable microbial barrier,
provides practitioners and healthcare facilities with a solution to
meet the growing need for safe, efficient, and cost-effective
flexible endoscopy. In addition to the combined company's
increased presence in urology, the combination of the two companies
will provide a platform for growth in other specialties that
currently perform endoscopic procedures in hospitals and physician
offices, which represents an addressable market opportunity of over
$1.3 billion.
"We believe that the combination of Uroplasty and
Vision-Sciences will increase our sales team's effectiveness in the
urology market and accelerate the growth of the combined company,"
said Rob Kill, President and CEO of Uroplasty. "We are confident
that offering Vision-Sciences' urology product lines to our core
urology customer base will also make us more meaningful and
valuable to those customers. At the same time, we expect that
the increased focus by care providers on endoscopic efficiency and
prevention of cross-contamination creates significant growth
opportunity for Vision-Sciences' EndoSheath technology in adjacent
markets such as ENT and pulmonology. With more than five
million units sold and zero reported cases of cross contamination,
we believe that EndoSheath products will be the standard of care
for endoscopic applications, and our team fully intends to turn
this efficacy leadership into market leadership. We look
forward to working with the Vision-Sciences' team to enhance
shareholder value through this combination."
Lewis C. Pell, Chairman of Vision-Sciences, commented, "During
the past several months as we have evaluated the combination of our
two companies, we have been thoroughly impressed by Uroplasty's
senior management team and distribution platform. They achieved
notable growth with the Urgent PC system, and we believe under
Uroplasty's leadership, that our shareholders have the best
opportunity to generate value through maximizing the global market
potential for the combined company's product lines and proprietary
technology."
|
1 Excludes shares of Vision-Sciences' common
stock issuable upon the conversion of convertible promissory notes,
and the exercise of warrants, held by Lewis C. Pell,
Vision-Sciences' Chairman. These notes and warrants have been
amended in connection with the merger, as described below. |
Financial Highlights
Cogentix Medical expects revenue growth between 11% - 14% in its
first fiscal year beginning on April 1, 2015. Once the
existing Uroplasty sales team is fully trained on the
Vision-Sciences' product line, the new company is expected to
achieve sustainable annual revenue growth of 15% beginning with its
second fiscal year.
Structure
The transaction is expected to qualify as a tax free
reorganization under the Internal Revenue Code. The
transaction is subject to customary closing conditions, including
approval of the shareholders of each of Uroplasty and
Vision-Sciences. In connection with this transaction, the
convertible promissory notes held by Mr. Pell will be
amended. The maturity date of the amended notes will be five
years from the date of the closing the merger, and interest accrued
under the notes shall be calculated quarterly and payable on the
maturity date or upon repayment or conversion of all or any portion
of the principal. In addition, the notes will not be
convertible until the third anniversary of the closing, except in a
change in control or if the Company decides to prepay the notes.
Vision-Sciences and Mr. Pell also agreed to extend the period
during which he may exercise his warrants, which will be
exercisable starting on the third anniversary of the
closing and ending on the later of the maturity date of the
convertible promissory notes or the date on which the notes are
converted or paid in full. The warrants would also be
exercisable in the event of a change in control.
The named executive officers and directors of each company,
representing approximately 4.2% and 39.1% of Uroplasty's and
Vision-Sciences' outstanding common stock respectively, evidenced
their support by entering into voting agreements to vote in favor
of the transaction.
About Vision-Sciences
Based in Orangeburg, New York, Vision-Sciences, Inc. designs,
develops, manufactures and markets products for flexible endoscopy.
The company's unique product lines feature 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. For more information on Vision-Sciences and its
products, please visit Vision-Sciences, Inc. at
www.visionsciences.com.
About Uroplasty
Uroplasty, Inc., headquartered in Minnetonka, Minnesota, with
wholly-owned subsidiaries in The Netherlands and the United
Kingdom, is a global medical device company that develops,
manufactures and markets innovative proprietary products for the
treatment of voiding dysfunctions. Uroplasty's focus is the
continued commercialization of its Urgent® PC Neuromodulation
System, which Uroplasty believes is the only commercially
available, 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. The symptoms include
urinary urgency, frequency and urge incontinence. Uroplasty
also offers Macroplastique®, an injectable urethral bulking agent
for the treatment of adult female stress urinary incontinence
primarily due to intrinsic sphincter deficiency. For more
information on Uroplasty and its products, please visit Uroplasty,
Inc. at www.uroplasty.com.
Advisors
In connection with this transaction, Piper Jaffray is acting as
exclusive financial advisor to Uroplasty. Leerink Partners is
acting as exclusive financial advisor to Vision-Sciences.
Oppenheimer Wolff & Donnelly LLP is acting as counsel
for Uroplasty, and Royer Cooper Cohen Braunfeld LLC is acting
as counsel for Vision-Sciences.
Conference Call and Webcast
Uroplasty and Vision-Sciences management will hold a conference
call for investors on December 22, 2014, beginning at 11:00 AM U.S.
Eastern Standard Time. This call can be accessed in three ways:
- By internet: Under the "Investors" tabs
at the Uroplasty website at www.uroplasty.com and Vision-Sciences
website at www.visionsciences.com.
- By telephone: For both "listen-only"
participants and those who wish to take part in the
question-and-answer portion of the call, the telephone dial-in
number in the U.S. is (888) 806-6230. For participants outside the
U.S., the dial-in number is (913) 312-0398. The access code for all
callers is 2077980.
- Through an audio replay: A replay of the call
will be available beginning at 2:00PM U.S. Eastern Standard Time on
December 22, 2014, and ending at 2:00PM U.S. Eastern Standard Time
on January 13, 2015. The dial-in number for U.S. participants is
(888) 203-1112. For participants outside the U.S., the replay
dial-in number is (719) 457-0820. The replay access code for all
callers is 2077980.
For Further Information
Uroplasty, Inc. Brett Reynolds, SVP and
CFO (952) 426-6152
EVC Group Doug Sherk/Brian Moore (Investors)
(415) 652-9100/(310) 579-6199 Janine McCargo (Business Media) (646)
688-0245
Cautionary Statements Related to Forward-Looking
Statements
This press release includes forward-looking statements.
These forward-looking statements generally can be identified by the
use of words such as "anticipate," "expect," "plan," "could,"
"may," "will," "believe," "estimate," "forecast," "goal,"
"project," and other words of similar meaning.
Forward-looking statements in this press release include, but are
not limited to, statements about the benefits of the transaction;
expected revenue growth rates; the expected timing of the
completion of the transaction; and the combined company's plans,
objectives, expectations and intentions with respect to future
operations, products and services. Each forward-looking
statement contained in this press release is subject to risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied by such statement. Applicable
risks and uncertainties include, among others, uncertainties as to
the timing of the transaction; uncertainties as to whether
Uroplasty shareholders and Vision-Sciences shareholders will
approve the transaction; the risk that competing offers will be
made; the possibility that various closing conditions for the
transaction may not be satisfied or waived; the risk that
shareholder litigation in connection with the transaction may
result in significant costs of defense, indemnification and
liability; other business effects, including the effects of
industry, economic or political conditions outside of either
company's control; the failure to realize synergies and
cost-savings from the transaction or delay in realization thereof;
the businesses of Uroplasty and Vision-Sciences may not be combined
successfully, or such combination may take longer, be more
difficult, time-consuming or costly to accomplish than expected;
operating costs and business disruption following completion of the
transaction, including adverse effects on employee retention and on
each company's respective business relationships with third
parties; transaction costs; actual or contingent liabilities; the
adequacy of the combined company's capital resources; and the risks
identified under the heading "Risk Factors" in Uroplasty's Annual
Report on Form 10-K, for the fiscal year ended March 31, 2014,
filed with the Securities and Exchange Commission ("SEC") on June
9, 2014, and Vision-Sciences' Annual Report on Form 10-K for the
fiscal year ended March 31, 2014, filed with the SEC on May 30,
2014, as well as both companies' subsequent Quarterly Reports on
Form 10-Q and other information filed by each company with the
SEC. Uroplasty and Vision-Sciences caution investors not to
place considerable reliance on the forward-looking statements
contained in this press release. You are encouraged to read
Uroplasty's and Vision-Sciences' filings with the SEC, available at
www.sec.gov, for a discussion of these and other risks and
uncertainties. The forward-looking statements in this press release
speak only as of the date of this release, and Uroplasty and
Vision-Sciences undertake no obligation to update or revise any of
these statements. Uroplasty's and Vision-Sciences' businesses
are subject to substantial risks and uncertainties, including those
referenced above. Investors, potential investors, and others
should give careful consideration to these risks and
uncertainties.
Important Additional Information About This Transaction
and Where to Find It
In connection with the proposed merger, Vision-Sciences plans to
file with the SEC a registration statement on Form S-4 that will
include a joint proxy statement of Uroplasty and Vision-Sciences
that also constitutes a prospectus of
Vision-Sciences. Uroplasty and Vision-Sciences will make the
joint proxy statement/prospectus available to their respective
shareholders. Investors are urged to read the joint proxy
statement/prospectus when it becomes available, because it will
contain important information. The registration statement,
definitive joint proxy statement/prospectus and other documents
filed by Uroplasty and Vision-Sciences with the SEC will be
available free of charge at the SEC's website (www.sec.gov) and
from Uroplasty and Vision-Sciences. Requests for copies of the
joint proxy statement/prospectus and other documents filed by
Uroplasty with the SEC may be made by contacting Brett Reynolds,
Senior Vice President, Chief Financial Officer by phone at (952)
426-6152 or by email at brett.reynolds@uroplasty.com, and request
for copies of the joint proxy statement/prospectus and other
documents filed by Vision-Sciences may be made by contacting Gary
Siegel, Vice President, Finance by phone at (845) 848-1085 or by
email at gary.siegel@visionsciences.com.
Uroplasty, Vision-Sciences, their respective directors,
executive officers and employees may be deemed to be participants
in the solicitation of proxies from Uroplasty's and
Vision-Sciences' respective shareholders in connection with the
proposed transaction. Information about the directors and
executive officers of Uroplasty and their ownership of Uroplasty
stock is set forth in Uroplasty's annual report on Form 10-K for
the fiscal year ended March 31, 2014, and its proxy statement
for its 2014 annual meeting of shareholders, which was filed with
the SEC on July 22, 2014. Information regarding Vision-Sciences'
directors and executive officers is contained in Vision-Sciences'
annual report on Form 10-K for the fiscal year ended March 31, 2014
and its proxy statement for its 2014 annual meeting of
shareholders, which was filed with the SEC on June 17, 2014. These
documents can be obtained free of charge from the sources indicated
above. Certain directors, executive officers and employees of
Uroplasty and Vision-Sciences may have direct or indirect interest
in the transaction due to securities holdings, vesting of equity
awards and rights to severance payments. Additional information
regarding the participants in the solicitation of Uroplasty and
Vision-Sciences shareholders will be included in the joint proxy
statement/prospectus filed with the SEC.
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