30 Mar 2020 15:37
30 March 2020
AorTech International plc
("AorTech" or the "Company")
Re Proposed Acquisition of RUA Medical Devices Limited ("RUA")
and
Update re COVID-19
Further to its announcement made on 25 March 2020 regarding contingency planning for the General Meeting to approve the acquisition of RUA, AorTech announces that the Independent Directors have considered the potential impact of the COVID-19 virus on both the Company and RUA and have reached an agreement with David Richmond, a Non-Executive Director of the Company and sole shareholder of RUA, to defer a proportion of the cash element of the consideration payable in order to ensure that the Enlarged Group has sufficient cash resources to meet its planned investment in Research and Development activities over the next year whilst providing a contingency for any short term disruption to trading due to COVID-19. It has been agreed that a total of £425,000 of the £950,000 cash consideration payable will be deferred for up to 2 years from Completion with a payment in April 2021 being subject to a minimum level of cash generation by RUA during the year to 31 March 2021.
Update re COVID-19
RUA suspended production temporarily last week to organise and enable safe working and all staff were asked to work from home where possible. However, both RUA facilities have re-opened today with production staff who are unable to work from home now working on a shift basis to facilitate social distancing within the premises, enhanced plant and personal hygiene procedures have also been brought into place. RUA is satisfied that the measures implemented meet current Government guidelines to protect employees and the wider community whilst ensuring the continued supply and development of essential medical devices.
RUA has received letters from two of its key customers stating that their respective businesses constitute essential critical infrastructure and, as such, by supplying those customers with goods or services necessary to manufacture or distribute their essential medical devices and healthcare products, then RUA is also an essential part of the healthcare infrastructure.
AorTech has not been made aware of any significant impact of COVID-19 to date from its licensees, but notes that two of the Elast-Eon™ enabled devices that represent a large proportion of annual Elast-Eon™ demand are ECMO (extracorporeal membrane oxygenation) cannulae which are used to oxygenate a patient's blood when ventilation is not sufficient to assist in lung failure. AorTech is proud to be associated with these products which are helping the most critically ill Coronavirus patients.
It is too early to quantify fully the impact of COVID-19 on the Group's business. The Board is taking prudent steps to mitigate and manage its cashflow and the agreement with David Richmond to defer part of the cash consideration is part of that exercise. The Board is confident that the Enlarged Group is well equipped and operating in an essential industry to enable both AorTech and RUA to withstand this near-term uncertainty.
Defined terms used in this announcement have the same meaning as in the Company's circular dated 11 May 2020.
This announcement contains inside information and is disclosed in accordance with the Company's obligations under the Market Abuse Regulation (EU) No 596/2014.
For further information contact:
AorTech International plc Tel: +44 (0)7730 718296
Bill Brown, Chairman
Shore Capital Tel: +44 (0)20 7408 4080
Tom Griffiths/David Coaten
About AorTech
AorTech has developed biostable, implantable polymers, including Elast-Eon™ and ECSil™, now manufactured on its behalf by Biomerics LLC in Utah, USA. Elast-Eon™ and ECSil™'s biostability is comparable to silicone while exhibiting excellent mechanical, blood contacting and flex-fatigue properties. These polymers can be processed using conventional thermoplastic extrusion and moulding techniques. With over 6 million implants and over 10 years of successful clinical use, AorTech polymers are proven in long term life enabling applications.
In addition to continuing to exploit AorTech's Intellectual Property related to the world class biomaterial - Elast-Eon™, AorTech is now incorporating this material into a number of medical devices of our own design. Elast-Eon™ has first class long term blood contacting properties and, as a result, all of the initial products being developed are for the cardio vascular field. Each device is being designed to have improved clinical outcomes over current device technology, eliminating the use of animal sourced material whilst allowing procedures to remain the same, therefore avoiding having to retrain surgeons in new ways of operating.