Buy-Out for Cash and Preferred Stock Expected to Strengthen International
MONROVIA, Calif, Oct. 26 /PRNewswire-FirstCall/ -- STAAR Surgical Company (Nasdaq: STAA), a leading developer, manufacturer and marketer of minimally invasive ophthalmic products, today announced that it has entered into an agreement to acquire the interests of all other shareholders in Canon Staar Co., Inc., a joint venture that was formed by STAAR, Canon Inc. and Canon Marketing Japan, Inc. in 1988 to develop, manufacture and sell in Japan products using STAAR's technology. On the closing of the transaction the entity will be renamed STAAR Japan, Inc. and become a wholly owned subsidiary of STAAR.
At closing STAAR will pay to the Canon companies $4 million in cash and 1.7 million newly issued shares of Series A Convertible Preferred Stock, and will acquire the 50% interest in Canon Staar currently owned by the Canon companies. The Series A Convertible Preferred Stock will be convertible into common stock at a one-to-one ratio, and under certain circumstances will be redeemable for cash at $4 per share.
Canon Staar's current business consists of manufacturing and selling the Preloaded Injector, which is a silicone or acrylic intraocular lens packaged and shipped in a pre-sterilized, disposable injector ready for use in cataract surgery. Canon Staar is also currently seeking approval from the Japanese regulatory authorities to market in Japan STAAR's Visian(R) ICL(TM), Collamer(R) IOL and AquaFlow(R) Device. Canon Staar recorded worldwide sales of $10.4 million in fiscal year 2006.
At closing STAAR Japan will take over the intraocular lens distribution business currently operated by Canon Marketing Japan and will be able to directly market its products. Ownership of STAAR Japan, and the termination of the principal joint venture agreements, will also give STAAR exclusive control over the rights to use STAAR's patents and other proprietary technology in Japan and China that were licensed to the joint venture at its inception in 1988 and under a Settlement Agreement entered into in 2001.
"The buy-out of Canon Staar brings us to a significant milestone in our international growth strategy," said David Bailey, President and CEO of STAAR Surgical. "We will have the capability to sell our cataract products directly in the large and growing Japanese market, which should yield enhanced gross margins and greater control over marketing and distribution. Our experience in Korea also suggests that with potential approval of our refractive products, the Visian ICL(TM) and Visian TICL(TM), Japan could become a large growth market for us. This transaction also strengthens our intellectual property position in Preloaded Injectors, which we believe will become the standard of care.
"Our partnership with the Canon companies has nurtured a technologically outstanding ophthalmic device maker in Japan," Mr. Bailey added. "Canon Staar introduced the world's first Preloaded Injector in 2003 and the first acrylic Preloaded Injector in 2006, and we believe it maintains leadership in this technology. The Canon companies' decision to sell their interest in this business gives STAAR, with its smaller scale and exclusive focus on ophthalmic implants, an opportunity to realize the full potential of the resources that we jointly developed in Japan. The significant stake in STAAR's equity that the Canon companies will have after the buy-out reflects both the importance of Canon's contribution to STAAR's future success and, we believe, the Canon companies' understanding that fully integrating the Japanese business into STAAR's worldwide business could yield significant value for our stockholders."
Canon Staar's acrylic Preloaded Injector, currently approved for sale in Japan and China, employs an acrylic lens supplied Nidek Co., Ltd. under an arrangement that will continue after the transaction. Nidek has also acted as a Japanese subdistributor for Canon Staar's silicone Preloaded Injectors, and STAAR anticipates that Nidek will continue to handle this sales channel after the closing of the transaction.
The closing of the acquisition is subject to customary closing conditions and is scheduled to occur on December 28, 2007 or after all conditions to closing have been met. STAAR has sufficient cash reserves to pay the cash consideration under the Purchase Agreement and complete the transaction. STAAR may, however, elect to seek financing for the transaction and additional working capital purposes. Based on recent indications of interest, STAAR believes it could obtain such financing on reasonably acceptable terms should it choose to do so.
About STAAR Surgical
STAAR is a leader in the development, manufacture and marketing of minimally invasive ophthalmic products employing proprietary technologies. STAAR's products are used by ophthalmic surgeons and include the Visian ICL, a tiny, flexible lens implanted to correct refractive errors, as well as innovative products designed to improve patient outcomes for cataracts and glaucoma. Manufactured in Switzerland by STAAR, the ICL is approved by the FDA for use in treating myopia, has received CE Marking and is sold in more than 40 countries. More than 85,000 ICLs have been sold worldwide. More information is available at http://www.staar.com.
Forward Looking Statements
All statements in this press release that are not statements of historical fact are forward-looking statements, including statements regarding the proposed acquisition of the Canon companies' interest in Canon Staar Co., Inc., the prospects for successful completion of that transaction, the effect of the transaction on STAAR and its business, the availability of financing, and any other statements of the plans, strategies, and objectives of management for future operations, any statements regarding future economic conditions or performance, statements of belief and any statements of assumptions underlying any of the foregoing. These statements are based on expectations and assumptions as of the date of this press release and are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. The risks and uncertainties include the need of the parties to satisfy contractual conditions before the acquisition of the Canon companies' interests in Canon Staar may close, the risk that STAAR may elect to close the transaction even if some conditions are not met or it discovers negative information about Canon Staar prior to closing, the risk that STAAR may not successfully integrate the Canon Staar business or employees into its overall business, the risk that key employees of Canon Staar may leave after closing, the risk that removal of the Canon name from Canon Staar and its products may reduce its goodwill or the acceptance of its products, the risk that Canon Staar may not sustain current or prior sales levels or achieve projected levels, the risk that STAAR's limited access to information has limited its ability to assess the projections provided to STAAR by Canon Staar's management, the risk that Japanese regulators may not approve the sale of the ICL or Collamer, the risk of operating a foreign subsidiary with limited direct oversight, the risk that applying U.S. accounting standards and controls and procedures over financial reporting may be more difficult, more expensive or more time-consuming than anticipated, STAAR's need to rely on the completeness and accuracy of information provided during its investigation of Canon Staar's business, the risk that financing for the transaction or for additional working capital purposes may be more difficult to obtain than anticipated and may not be available on reasonable terms, if at all, and other factors beyond our control, including those detailed from time to time in our reports filed with the Securities and Exchange Commission. STAAR assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so.
EVC Group EVC Group
Jennifer Beugelmans, 646-201-5447 Jen Saunders, 646-201-5431
Douglas Sherk, 415-896-6820
|SOURCE STAAR Surgical Company|
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