Charles Koch to invest $200-250m in Insightec


Koch Industries will become the controlling shareholder in the Israeli MRI guided ultrasound company.

KDT Medical Investments controlled by billionaire Charles Koch's Koch Industries is expected to invest $200-250 million in Israeli MRI guided ultrasound company Insightec and become the controlling shareholder.

Yesterday Elbit Imaging Ltd. (TASE: EMITF; OTC: EMITF) and its subsidiary Elbit Medical Technologies Ltd. (TASE: EMTC) announced that they has signed a binding agreement with KDT Medical investments to sell most of their shares in Insightec for $103.5 million. The deal reflects a valuation of $710-720 million for Insightec in full dilution.

Prior to the deal, Koch Industries already held a 17% stake in Insightec after investing $150 million in the previous financing round at a company valuation of $610 million, after money. Koch's stake will now rise from 14.5% to 31.5%.

In addition, it was reported yesterday that Insightec has signed a non-binding Memorandum of Understanding (MoU) with one of its existing shareholders to invest an additional $100-150 million. The investor was not named but in all likelihood it is Koch Industries, which would receive a controlling stake after the investment.

The report indicates that the existing shareholder and others will inject money into Insightec in return for the allocation of all the new Series F preferred shares at $3.66 per share. As part of this investment deal, the extra rights granted to holders of Series C, D, and E preferred shares in the event of an exit will be canceled, and the holders of these shares will receive 52 million more preferred shares.

Insightec developed and markets a system for using focused MRI-guided ultrasound waves to destroy tissue, for treatment of non-Parkinson tremors, and to clear "blood-brain blockage." The company reported a 10% increase in revenue to $22 million and a 19% increase in its net loss to $37 million in the first nine months of 2019.

As of the end of September 2019, Insightec had $77 million in cash, while its burn rate in the first nine months of 2019 was $40 million, meaning that the company is liable to run out of cash in 2021.

Published by Globes, Israel business news - - on January 6, 2020

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