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News News by industry Hi-tech Doubts over Diomed’s Cambridge future | Doubts over Diomed’s Cambridge future |
| Written by Sam Fountain | |
| Wednesday, 19 March 2008 | |
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A medical laser technology developer which employs 45 people at its Cambridge subsidiary has announced that it has filed Chapter 11 in the US, casting serious doubt on the company’s future in the region.
The voluntary petition for bankruptcy filed by parent company, Diomed, contemplates that the US company will sell certain of its operating assets to Biolitec AG, a manufacturer of medical lasers, optical fibres and other products, thereby enabling Biolitec to continue to operate Diomed’s business in the United States. Diomed and Biolitec, which is based in Germany, have entered into a non-binding letter of intent to sell some assets for a purchase price of between $6m-$7m (£2.9m-£3.4m), which is expected to be completed within 60 to 90 days. Diomed Limited, a wholly own subsidiary of Diomed, has determined to file for Administration locally under the laws of the United Kingdom, contemporaneously with Diomed’s bankruptcy filing in the United States. The company’s UK subsidiary, which operates out of a leased space in Cambridge Research Park and employed 45 people as of December 2006, has filed for protection under an administration order in the UK. At the time of going to press, Diomed’s Cambridge office was unavailable for comment on the progress of the order, or what it might mean for the region’s employees. The company says that it has fallen foul of a number of patent infringements for its endoveinous laser treatment for varicose veins, for which it filed legal action in 2004, but has yet to receive damages from the claim after an appeal was made earlier this year. Diomed CEO, James Wylie said: “The decision to pursue the sale of the company’s assets and operations through the bankruptcy process was an extremely difficult but appropriate decision for our board of directors to make. “In spite of our intensive efforts to seek a buyer for the company outside of bankruptcy and to work with our secured lenders to avoid seeking bankruptcy protection, the impact of infringement of the company’s products in the marketplace and delays in the judicial process proved impossible to overcome.” The company believes that in light of the many challenges facing Diomed, bankruptcy is the best available option that will protect the company’s assets and allow the company’s operations to be sold through an orderly process. With court approval, Diomed will continue operating in the ordinary course of business as a debtor-in-possession while it pursues the sale of specified assets to Biolitec and the sale of its other assets to third parties. Included in those other assets is a judgment made in Diomed’s favour of approximately $14.7m (£7.3m). The judgment was awarded in 2007 as a result of patent infringement litigation against two other companies. In order to fund its operations during bankruptcy, Diomed will use its cash and receipts and will obtain debtor-in-possession financing from its senior secured creditor, Hercules Technology Growth Capital. If Hercules and Diomed are unable to reach agreement on the terms of such financing, Biolitec has agreed to provide necessary financing of up to $2m (£990k) during the transition period.
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