Bankrupt Diomed to Sell
ANDOVER, Mass., Mar. 17, 2008 -- Diomed Holdings Inc., a developer of minimally invasive medical laser technologies, announced it has filed for bankruptcy and plans to sell some assets to medical laser maker Biolitec AG of Germany for as much as $7 million.
Diomed, which is based in Andover and has a subsidiary, Diomed Inc., manufactures the EVLT laser for treating varicose veins. It also offers photodynamic therapy for cancer, dental and general surgical applications.
As of Dec. 31, 2006, Diomed had 100 full-time employees, 55 in the US and 45 at its Diomed Ltd. subsidiary in Cambridge, England, which has filed for protection under an administration order in the UK.
Diomed owns no property, leasing 20,500-sq-ft of office, manufacturing and research and development space in Cambridge and 6300-sq-ft of office and distribution space in Andover. The company reported a net loss of $10.2 million for fiscal year 2006.
In its Chapter 11 filing with the US Bankruptcy Court for the District of Massachuetts, Western Div., Diomed said it has tentatively agreed to sell some of its operating assets for between $6 million and $7 million to Biolitec, enabling the Germany company to operate Diomed's business in the US. The assets were not specified.
Biolitec has its headquarters in Jena, Germany, and employs approximately 60 at its US operations in East Longmeadow, Mass. The company creates photosensitizers (light-activated drugs), medical lasers, and laser delivery systems for less-invasive medical procedures. It is also the parent company of CeramOptec, a Bonn, Germany-based maker of specialty optical fiber and fiber optic-based products for industrial, scientific, medical, and dental applications.
"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," said Diomed CEO James A. Wylie Jr., in a statement. "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 said the company chose bankruptcy as the best way to protect its assets while it continues to sell its operations. Diomed will continue to fund its operations during bankruptcy by using its cash and receipts and obtaining debtor-in-possession financing from its senior secured creditor, Hercules Technology Growth Capital Inc.
If it can't arrange financing with Hercules, Diomed said Biolitec has agreed to provide up to $2 million, subject to court approval, while it continues to sell its assets to Biolitec and other parties.
Among its assets, Diomed said, is a $14.7 million judgment it was awarded in March 2007 in a patent infringement lawsuit against two companies. The ruling was appealed; a hearing on the appeal will be held next month.
The proceeds of the sale of Diomed's assets will be distributed to the company's creditors and equity holders as determined by the bankruptcy court. Diomed said it expects to complete the asset sale to Biolitec within approximately 60 to 90 days.
For more information, visit: www.evlt.com