A Medical Device Daily

Boston Scientific (Natick, Massachusetts) reported that it has successfully amended its $2 billion revolving line of credit and $5 billion term loan agreement, providing the company a bit more breathing room as it attempts to get out from under the debt primarily associated with last year’s acquisition of Guidant (Indianapolis).

The company reported $8.9 billion in debt on June 30, much of which was taken on following the $27.5 billion acquisition of Guidant last year.

In connection with the amended agreement, the company prepaid $1 billion of its term loan using $750 million from cash on hand and $250 million from a credit facility secured by U.S. receivables, resulting in a gross debt reduction of $750 million. The $1 billion prepays the April 2008 term loan obligation of $650 million and reduces the $650 million April 2009 obligation by $350 million, with the company owing about $300 million at that time.

After paying down $1 billion of its term loan, the company said it still has nearly $1 billion of cash on hand and full access to its $2 billion undrawn revolving credit facility. It added that interest rate margins and fee rates for the amended credit facility remain unchanged.

“We were pleased to work with our lenders to amend our credit facility,” said Jim Tobin, president/CEO of Boston Scientific. “These changes provide significant financial flexibility that will assist us as we execute our plan to divest non-strategic assets, monetize our investment portfolio, and reduce expenses and head count, as well as achieve our broader goal of increasing shareholder value.”

In other moves to cut its debt and reduce costs, the company is in the process of exploring sales of its Cardiac Surgery, Vascular Surgery (Medical Device Daily, Aug. 20, 2007), and Fluid Management businesses (MDD, July 26, 2007), which if consummated, could yield at least $500 million to $600 million in pretax proceeds for the company. The company also said it was selling the auditory assets of Advanced Bionics (Valencia, California) while retaining the pain management assets of that company after a protracted legal struggle with that company’s management (MDD, Aug. 13, 2007). Additionally, the company reported plans to announce restructuring and job cuts later this year.

The new amendment also clarifies the definition of EBITDA to exclude up to $300 million of any restructuring charges incurred through June 30, 2009 and up to $500 million of any litigation charges — less any litigation income recorded — each year through June 30, 2009. In addition, the amendment changes the application of any term loan pre-payments from pro-rata across maturities to the chronological order of maturities.

Larry Biegelsen, a med-tech analyst for Wachovia Capital Markets, wrote in a research note that the EBITDA clarification indicates to him that the company plans to undertake a “substantial restructuring” to cut costs and expects ICD litigation costs associated with its Guidant buy to “fall below the $706 million reserve disclosed in the most recent 10-Q.”

• Globus Medical (Audubon, Pennsylvania), one of the largest privately-held spinal implant manufacturers in the world, reported the closing of a $110 million Series E financing round.

Clarus Ventures led the round and was joined by AIG SunAmerica and other large, institutional private equity funds. Banc of America Securities acted as sole placement agent.

The new financing will be used to fuel the company’s rapid growth and fund clinical trials associated with multiple technologies under development, the company said.

In the first half of 2007, Globus said it has “dramatically expanded the company’s sales and distribution footprint” and introduced six new systems that represent significant technological advancements in fusion, MIS and biomaterials. Additionally, in the area of motion preservation, the company announced two “world’s first” surgeries using its transforaminal and posterior disc replacement systems.

As the result of this financing, Kurt Wheeler and Robert Liptak, managing directors at Clarus Ventures, will join Globus Medical’s board of directors.

In other financing news:

• Isolagen (Exton, Pennsylvania) reported that it completed its previously disclosed registered direct offering of about 6.76 million shares of common stock at a price of $2.04 per share to institutional investors for gross proceeds of about $13.8 million (MDD, Aug. 16, 2007). The shares were offered under a shelf registration statement previously filed with the Securities and Exchange Commission.

Isolagen is an aesthetic and therapeutic company whose technology platform includes the Isolagen Process, a cell processing system for skin and tissue rejuvenation which is currently in clinical development for a broad range of aesthetic and therapeutic applications including wrinkles, acne scars, burns and periodontal disease. The company also commercializes a line of skincare systems through its majority-owned subsidiary, Agera Laboratories.

• Candela (Wayland, Massachusetts) reported that its board has approved an increase in the previously authorized share buyback program.

The company is now authorized to repurchase up to 2.3 million shares, including shares remaining available under the earlier program and the newly authorized shares.

The current repurchase program represents about 10% of the company’s outstanding shares.

Gerard Puorro, Candela president/CEO, said, “The board of directors and the senior management of Candela believe that, at current prices, repurchasing the company’s stock is a very good use of our cash.”

Candela manufactures products that enable physicians, surgeons, and personal care practitioners to treat selected cosmetic and medical conditions using lasers, aesthetic laser systems, and other advanced technologies.

• Thermo Fisher Scientific (Waltham, Massachusetts) said that certain executive officers, including Marijn Dekkers, president/CEO, are adopting stock-trading programs under SEC Rule 10b5-1 covering the future sale of company stock.

Dekkers, who exercised options for and sold 300,000 shares over Aug. 15-17, 2007, has adopted a plan for the future sale of up to another 780,000 shares, which he would acquire upon the exercise of stock options granted in 2002. Dekkers entered into this program in order to diversify his financial holdings, although he will continue to have a significant ownership interest in the company. After selling these shares, Dekkers would own shares, or share equivalents, and hold options totaling 1,860,378 shares.

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