A Medical Device Daily
North American Scientific (NAS; Chatsworth, California) on Thursday said it filed for bankruptcy and agreed to sell its prostate brachytherapy product line at a reduced price.
The company filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Central District of California. NAS cited that its bank had reduced the company's borrowing ability.
In addition, the company said it agreed to sell its prostate brachytherapy product line to Best Theratronics (Ottawa, Ontario) under a new asset purchase agreement, lowering the sale price to $2.5. NAS had agreed last month to sell the assets to Best for $5 million. Best also terminated a management agreement the companies signed last month (Medical Device Daily, Feb. 13, 2009).
The new asset purchase agreement calls for NAS to receive $1.5 million at closing and the remaining $1 million will be paid in equal installments over the next 12 months. The company's board has approved the deal and the company has petitioned the court for an expedited process to sell the prostate assets.
"This was a very difficult but necessary decision," said John Rush, president/CEO. "We have been focused on realigning our company through the disposition of the prostate brachytherapy business as a means to fund the clinical release of our ClearPath breast device. However, due to an unforeseen inability to continue to access funds under our credit facility, and the terminated management agreement, we are forced to alter our direction with the goal of achieving the same endpoint. This filing should relieve the immediate pressure from our creditors, and provide us the time to complete the sale of the prostate business while we continue to gain clinical experience with our ClearPath product line."
NAS said it expects that Chapter 11 protection will enable it to conduct its business operations as usual in both the prostate and breast device segments. To that end, the company said it is seeking approval from the court for a variety of first day motions enabling it to continue managing its operations in the ordinary course.