Victhom Human Bionics, Quebec, Canada, and Otto Bock HealthCare, Duderstadt, Germany, have agreed to establish a joint venture to develop and commercialize products currently being developed by Victhom’s Neurobionix division.
According to a Victhom press release, their objective is to bring to market Victhom’s neuromodulation product, the Neurostep® System for the treatment of gait disorders, such as foot drop. This joint venture intends to combine Victhom’s technology with Otto Bock’s distribution network.
As part of this transaction, Victhom will transfer all of the assets of its Neurobionix division to a newly created vehicle (the joint venture) concurrent with a total equity investment by Otto Bock of $30 million (CAD) in the joint venture. The initial investment by Otto Bock will amount to $12.5 million (CAD) and will result in the joint venture being owned, upon closing of this transaction, 55.6 percent by Otto Bock and 44.4 percent by Victhom. The partnership agreement also provides for additional equity contributions by Otto Bock of $17.5 million (CAD) over the next two and a half years that will be mainly used to fund the development of the Neurostep System but also the development of other products.
As a concurrent condition to the transaction with Otto Bock, Victhom will implement, by way of plan of arrangement under the Canada Business Corporations Act, the conversion of its 7 percent convertible debentures in the capital amount of $18,354,000 (CAD) maturing in March 2010 into a newly created class of preferred shares, on the basis of 12.5 preferred shares (pre-consolidation) per dollar of capital converted, and the consolidation of its common shares on a ten-for-one basis. The transfer of the assets of the Neurobionix division will also be implemented by way of the plan of arrangement.
Victhom says that it expects to hold separate debenture-holder and shareholder meetings in early June to obtain certain required approvals for the plan of arrangement as well as the creation of the joint venture. In addition to debenture-holders and shareholders approvals, implementation of the joint venture transaction and the plan of arrangement is subject to approval by the Court under the Canada Business Corporations Act and receipt of all necessary regulatory and stock exchange approvals.
The principal debenture holders and shareholders have executed support agreements with Victhom and Otto Bock whereby they agreed to vote in favor of the transaction with Otto Bock and the concurrent implementation of the plan of arrangement.
Normand Rivard, acting president and CFO of Victhom, said, “We are tremendously enthusiastic with the prospect of teaming up with Otto Bock…. The combination of our technology know-how and Otto Bock’s worldwide market knowledge will give us a tremendous edge in bringing this much-needed solution to gait patients throughout the world. The interest from Otto Bock is a validation for us of what we have accomplished in the last few years.
Hans Georg Näder, Otto Bock president and CEO, said, “We are going to bring scientific expertise and our global network into the partnership and gradually continue our financial commitment. Our joint venture with Victhom’s Neurobionix division will strengthen our research and development activities in neurostimulation over the long term. As a growing global medical technology company, Otto Bock HealthCare has the strength to ensure that the developments and products in our product range will reach successfully the global healthcare markets and increase the quality of life of the patients in their daily life.”
