COLUMBIA, Md., Sept. 23 /PRNewswire-FirstCall/ -- Martek Biosciences Corporation (Nasdaq: MATK) announced today that it has entered into an agreement to sell a significant portion of the assets at its Winchester, Ky., manufacturing site to Alltech, an animal health company headquartered in Nicholasville, Ky. The assets to be sold include a majority of the land and buildings at the Winchester site as well as certain equipment therein, including all of the production-scale fermentation and recovery equipment. The transaction does not include the sale of, license of, or granting of any rights to any of Martek's strains, patents or any other technologies. It also does not permit the use of the Winchester assets to produce omega-3 and/or omega-6 polyunsaturated fatty acids for human use for a period of 10 years. The sale is consistent with Martek's previously announced plans to restructure its Winchester, Ky., manufacturing facilities in an effort to streamline operations, improve capacity utilization, and reduce manufacturing costs and operating expenses. Under the terms of the sale agreement, Alltech will pay Martek a total of approximately $14 million over the next four years for the assets to be acquired. The transaction is expected to close by November 30, 2010, subject to customary closing conditions.
Also as previously disclosed, as a result of the Winchester plant restructuring and sale, Martek will incur both non-cash asset impairment and cash charges. Based on the terms of the sale, we currently project that non-cash charges of approximately $28-32 million will be recorded in the fourth quarter of fiscal year 2010 as well as cash charges of approximately $1 million related to employee separation costs.
Following the sale and restructuring, Martek plans to continue to maintain a strong presence in Winchester, with approximately 50 skilled employees focused primarily on lab and pilot scale development, limited production, and supply-chain management. In addition, Martek will maintain necessary production redundancies through continuing access to certain key processes at the Winchester facility and arrangements with contract manufacturers.
"The restructuring of our manufacturing operations and this related asset sale is a necessary part of our strategy to significantly offset price reductions resulting from our infant formula contract extensions through the implementation of manufacturing cost savings, product innovation initiatives, and growing our non-infant formula business. Importantly, Martek will continue to have access to back-up production facilities, if needed. This transaction will also enable Martek to maintain a considerable presence in Winchester where we will carry-out a variety of critical innovation, development, and other activities," said Steve Dubin, CEO of Martek Biosciences Corporation.
About Martek Biosciences Corporation
Martek Biosciences Corporation (NASDAQ: MATK) is a leader in the innovation, development, production and sales of high-value products from microbial sources that promote health and wellness through nutrition. The company's technology platform consists of its core expertise, broad experience and proprietary technology in areas such as microbial biology, algal genomics, fermentation and oil processing. This technology platform has resulted in Martek's development of a number of products including the company's flagship product, life'sDHA a sustainable and vegetarian source of algal DHA (docosahexaenoic acid) important for brain, heart and eye health throughout life for use in infant formula, pregnancy and nursing products, foods and beverages and dietary supplements. The company also produces life'sARA (arachidonic acid), an omega-6 fatty acid, for use in infant formula and growing-up milks. Martek's subsidiary, Amerifit Brands, develops, markets and distributes branded consumer health and wellness products and holds leading brand positions in all of its key product categories. Amerifit products are sold in most major mass, club, drug, grocery and specialty stores and include: Culturelle®, a leading probiotic supplement; AZO, the leading OTC brand addressing symptom relief, detection and prevention of urinary tract infections; and ESTROVEN®, the leading all-natural nutritional supplement brand addressing the symptoms of menopause. Martek currently has a number of nutritional health and wellness products under development that it plans to commercialize and distribute through Amerifit's distribution channels.
Martek's technology platform has also made it a sought-after partner on a range of groundbreaking projects in process, including the development of microbially-derived biofuels and the development of DHA-containing oilseeds. For more information on Martek Biosciences, visit http://www.martek.com/. For a complete list of life'sDHA and life'sARA products, visit http://www.lifesdha.com/. For more information about Amerifit Brands, visit www.amerifit.com.
Safe Harbor Statement
Sections of this release contain forward-looking statements. These statements, including statements about (i) Martek's planned restructuring initiatives in Winchester, Ky., and its plans with respect to future activities at that site, (ii) expected future production and economic benefits of the restructuring, (iii) expected charges resulting from the restructuring, (iv) expected production capacity for DHA and ARA, (v) expected future growth in demand for, and sales of, Martek products, and (vi) performance of the Amerifit division, are based upon numerous assumptions which Martek cannot control and involve risks and uncertainties that could cause actual results to differ. These statements should be understood in light of the risk factors set forth in the company's filings with the Securities and Exchange Commission, including, but not limited to, the company's Form 10-K for the fiscal year ended October 31, 2009 and other filed reports on Form 10-K, Form 10-Q and Form 8-K.
SOURCE Martek Biosciences Corporation