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 - en.globes.co.il - on January 6, 2020
© Copyright of Globes Publisher Itonut (1983) Ltd. 2020