Leeco Diagnostics Inc. disclosed Wednesday an agreement on athree-step financial restructuring by which its diagnostic kitbusiness would be acquired by its majority shareholder,Recordati International Holding S.A. of Italy.
Leeco's minority shareholders would end up with a 40 percentownership of a new holding company that would include -- andwhose stock would trade publicly as -- Endogen Inc. Endogen isnow a privately held, Boston-based developer of reagents andimmunoassay test kits sold to research laboratories. Endogen'sexisting shareholders would retain the remaining 60 percentstake in the successor company.
Leeco (NASDAQ:LECO) of Southfield, Mich., announced plans fora financial restructuring last December after suffering a hugeloss in its U.S. operations, which it said it would shut down. Thecompany posted an $8.2 million loss for 1991, including a $5million provision for restructuring costs.
Helped by a sharp reduction in operating and interestexpenses, Leeco said Wednesday that it earned $174,449, or 3cents per share, on revenues of $9.4 million for the six monthsended June 30. That compared with a $1.3 million loss, or 22cents, on revenues of $11.1 million for the first six months of1991.
Endogen had revenues of $1.9 million for the year ended May31, according to Leeco's announcement.
Founded in 1978, Leeco initially made and marketed in vitrodiagnostic test kits used by hospital and clinical laboratories. Itmade an initial public stock offering in 1983 and graduallyexpanded into diagnostic kits sold into physicians' offices andover-the-counter markets. Under a 1987 agreement, Leecosupplied pregnancy detection kits to Johnson & Johnson's Orthodivision until 1991.
Recordati Holding, a subsidiary of Italy's Recordati IndustrialChemica e Farmaceutica, acquired a majority interest in Leecoin 1988.
Under terms announced Wednesday, Recordati agreed to pay$3.5 million and relinquish its 53 percent ownership in Leecoand related warrants to acquire Leeco's product line.
Terms of the agreement were negotiated on Leeco's behalf by aspecial committee of its own directors, who are unaffiliatedwith Recordati.
The deal is subject to a fairness opinion from Leeco'sindependent financial adviser, certain government filings andthe approval of shareholders. No settlement date wasannounced. -- Ray Potter
(c) 1997 American Health Consultants. All rights reserved.