Elutex, which operates within the Meytav Technological Enterprises Innovation Center Ltd. (Meytav), which is 67% owned by Biomedix Incubator Ltd. (TASE:BMDX.M) (formerly Team DCL), has raised $600,000 from private investors, among them parties at interest in Biomedix. The finance was raised at a value of $2.5 million, before the money and has reduced Biomedix’s holdings in Elutex from 58.86% to 44.8%. The investors also received an option to invest a further $300,000 in Elutex at a value of $3.5 million before the money.
Elutex also received a NIS 300,000 index-linked loan from Clal Finance. The loan bears 7% interest and Clal Finance may increase the loan by a further NIS 150,000 within three months. The first loan can be converted to Elutex shares at a company value of $2 million. The additional loan is convertible to shares at a value of $4 million. Clal Finance will be entitled to be demand immediate repayment of the loan in the event of an IPO, merger, or acquisition, or alternatively, to acquire Elutex stock for a sum equal to the amount of the loan at a company value of $4 million before the money. The option will be valid for two years from the date of the signing of the contract.
A convertible loan to a company from an underwriter is a clear indication of plans for a future IPO. The agreement states explicitly that Clal Finance will be lead underwriter of any IPO conducted within four years from the signing contract, unless Elutex receives a flotation proposal on better terms, in which case Clal Finance will have right of first refusal. While a company’s value for the conversion usually provides an indication of the expected value in an IPO, Elutex’s value is currently too low. It is expected to make efforts to reach further milestones during the next two quarters. If it manages to do so, it is likely to raise a substantial amount of finance.
Elutex was founded by professor Avi Domb, and has developed a technology for electro-chemical coating of medical implants. The company’s flagship product is a precise and scaleable electrocoating manufacturing process that can produce thinner and more uniformly coated drug eluting stents.
Published by Globes [online], Israel business news - www.globes.co.il - on May 28, 2006
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