Sources inform ''Globes'' that Elbit Medical Imaging has deferred the IPO of its subsidiary, medical device company InSightec.
Elbit Medical Imaging (Nasdaq: EMITF; TASE: EMIT), a subsidiary of Mordechai (Motti) Zisser's Europe Israel (M.M.S.) Ltd. Elbit Medical Imaging planned to float InSightec on Wall Street at a company value of at least $500 million, but the underwriters gave the company a much lower valuation.
Further evidence of the postponement came today when InSightec announced that it had closed a $15 million internal financing round from existing investors. Elbit Medical Imaging invested $9.8 million, and its stake in the company following the round will be diluted to 52%. The other investors in the round are GE Capital Equity Holdings Inc., a subsidiary of General Electric Company (NYSE: GE), and MediTech Advisors LP, a private firm specializing in the healthcare marketplace.
The timing of the internal round is puzzling, since Elbit Medical Imaging had planned to float InSightec during the second half of 2006. The company had previously said it planned to raise $80 million at a minimum company value of $500 million. Capital market sources told “Globes” that the underwriters for the offering gave InSightec a company value of $350 million, which was not enough for Elbit Medical Imaging, and it therefore prefers to wait. The flotation will reportedly be deferred to early next year at the earliest.
The current investment will take the form of convertible notes, which are convertible to InSightec’s ordinary shares subject to the fulfillment of certain conditions stipulated in the agreement. In addition, the existing investors have been granted contingent warrants exercisable at a nominal price for Insightec ordinary shares subject to the fulfillment of certain conditions stipulated in the agreement.
InSightec said the funds would be used to expand its research and development efforts, for marketing and sales activities and for general corporate purposes.
InSightec president and CEO Dr. Kobi Vortman said, “The ExAblate 2000 treatments of uterine fibroids continue to grow globally with excellent clinical results driving market adoption and with more than 30 leading sites globally.
"In parallel InSightec is expanding the research into new oncology areas: bone metastases, breast cancer, liver tumors and brain tumors. The preliminary results from the treatment of bone metastases and breast cancer are demonstrating that this technology has the potential to become an important treatment alternative in these applications.
"The investment will allow acceleration of the technical and clinical research in these new fields. The continued support by our current investors is a vote of confidence in the employees, the technology and the vision, and we are proud of it.”
The ExAblate 2000 is the first US Food and Drug Administration approved system that combines MRI to visualize tissues in the body, plan the treatment and monitor in real time treatment outcome and high intensity focused ultrasound, to thermally ablate uterine fibroid tissue.
InSightec was founded in 1999. The company has its headquarters near Haifa, and employs over 135 people. It has invested more than $70 million in research, development, and clinical investigations. InSightec's US headquarter is in Dallas, Texas.
Published by Globes [online], Israel business news - www.globes.co.il - on August 10, 2006
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