AUSTIN, Texas--(BUSINESS WIRE)--ArthroCare Corp. (Pink Sheets: ARTC - News) today announced that it has closed its previously announced financing with One Equity Partners (OEP), the global private equity investment arm of JPMorgan Chase & Co.
In connection with the financing, OEP has purchased $75 million of newly-issued ArthroCare Series A Convertible Preferred Stock, which will be convertible into shares of ArthroCare common stock at $15.00 per share, a premium over the closing price of the Company’s common stock on August 14, 2009 and the 30-day trading average. Cumulative dividends on the ArthroCare preferred stock will be payable-in-kind at an annual rate of 3.0% for five years after the preferred stock is issued, and a make-whole adjustment will apply if OEP elects to convert its shares before September 2014. Upon the close of the transaction today, and in conjunction with OEP’s investment, Chris Ahrens and Greg Belinfanti, both Partners of OEP, will join ArthroCare’s Board of Directors.
Mr. Ahrens, age 33, is a Managing Director of OEP and, prior to joining OEP in 2001, worked at Goldman Sachs. He currently serves on the Boards of Carlson Wagonlit Travel, Systagenix Wound Management, Travel Leaders Group and Vertrue. Mr. Ahrens received his A.B. from Princeton University.
Mr. Belinfanti, age 34, is a Managing Director of OEP and, prior to joining OEP in 2006, served as a Vice President in the Investment Banking division of Lehman Brothers, specializing in Global Healthcare. Mr. Belinfanti serves on the Boards of Apollo Health Street, Prodigy Health Group and Systagenix Wound Management. Mr. Belinfanti received his B.A. from New York University and his J.D. from Harvard Law School.
In conjunction with the closing of the financing, ArthroCare has repaid all obligations under the Company’s Credit Agreement and expects to use the remaining portion of the proceeds for general corporate purposes. Additionally, all rights and obligations under the Credit Agreement are being terminated and all security interests and other encumbrances are being released, other than the Company’s obligations with respect to a letter of credit issued in favor of a lender affiliate under the Credit Agreement in the amount of €750,000, which will be cash collateralized in the approximate amount of $1.4 million.
ABOUT ARTHROCARE
Founded in 1993, ArthroCare Corp. is a highly innovative, multi-business medical device company that develops, manufactures and markets minimally invasive surgical products. With these products, ArthroCare targets a multi-billion dollar market opportunity across several medical specialties, significantly improving existing surgical procedures and enabling new, minimally invasive procedures. Many of ArthroCare’s products are based on its patented Coblation® technology, which uses low-temperature radiofrequency energy to gently and precisely dissolve rather than burn soft tissue — minimizing damage to healthy tissue. Used in more than four million surgeries worldwide, Coblation-based devices have been developed and marketed for sports medicine; spine/neurologic; ear, nose and throat (ENT); cosmetic; urologic and gynecologic procedures. ArthroCare also has added a number of novel technologies to its portfolio, including Opus Medical sports medicine, Parallax spine and Applied Therapeutics ENT products, to complement Coblation within key indications.
ABOUT ONE EQUITY PARTNERS
Established in 2001, One Equity Partners manages $8 billion of investments and commitments for JPMorgan Chase & Co. in direct private equity transactions. One Equity Partners has invested in over 30 companies in a variety of industries including defense, chemicals, healthcare, technology and manufacturing. One Equity Partners’ investment professionals are located across North America, Europe and Asia, with offices in New York, Chicago, Menlo Park, Frankfurt and Hong Kong. Visit http://www.oneequity.com/ for more information.
FORWARD-LOOKING STATEMENTS
The information provided herein includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on beliefs and assumptions by management and on information currently available to management. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any of them publicly in light of new information or future events. Additional factors that could cause actual results to differ materially from those contained in any forward-looking statement include, without limitation: the ability of the Company to fulfill its obligations with respect to the rights of the holders of the Series A Convertible Preferred Stock, including but not limited to the redemption rights and registration rights of the holders of the Series A Convertible Preferred Stock; the resolution of litigation pending against the Company including the arbitration between Gyrus Group, PLC, Ethicon, Inc. and ArthroCare; unanticipated accounting issues or audit issues regarding the financial data for the periods being restated in the Company’s previously announced restatement; the ability of the Company and its independent registered public accounting firm to confirm information or data identified in the review of the Company’s internal controls and the review of insurance billing and healthcare fraud-and-abuse compliance practices being conducted under the supervision of the Audit Committee of the Board of Directors (the reviews of internal controls and insurance reimbursement practices are collectively referred to herein as the “Reviews”); the likelihood that deficiencies in the Company’s internal controls constitute material weaknesses in the Company’s internal control over financial reporting; unanticipated issues regarding the Reviews that prevent or delay the Company’s independent registered public accounting firm from relying upon the Reviews or that require additional efforts, documentation, procedures, review or investigation; the Company’s ability to design or improve internal controls to address issues detected in the Reviews or by management in its reassessment of the Company’s internal controls; the impact upon the Company’s operations of the Reviews, legal compliance matters or internal controls, improvement and remediation; difficulties in controlling expenses, including costs of the Reviews, legal compliance matters or internal controls review, improvement and remediation; the Company’s ability to become current in its periodic reporting requirements under the Exchange Act; the outcome of pending litigation and the anticipated arbitration proceeding; the results of the investigations being conducted by the Staff of the Division of Enforcement of the Securities and Exchange Commission and the United States Attorneys’ offices in Florida and North Carolina; the impact on the Company of additional civil and criminal investigations by state and federal agencies and civil suits by private third parties involving the Company’s financial reporting and its previously announced restatement and its insurance billing and healthcare fraud-and-abuse compliance practices; general business, economic and political conditions; competitive developments in the medical devices market; changes in applicable legislative or regulatory requirements; the Company’s ability to effectively and successfully implement its financial and strategic alternatives, as well as business strategies, and manage the risks in its business; and the reactions of the marketplace to the foregoing.
Contact:
ArthroCare Corp. Corinne Ervin, 512-391-3907 or Joele Frank, Wilkinson Brimmer Katcher Andrea Priest or Jennifer Friedman, 212-355-4449
