Digirad Corporation (NASDAQ: DRAD) (“Digirad” or “DRAD”) announced
today that its Board of Directors has approved the acquisition of
ATRM Holdings, Inc. (OTC: ATRM) (“ATRM”) as an initial “kick-off”
transaction (the “Transaction”) to transform Digirad into a
diversified holding company (“HoldCo”). As part of the
Transaction, Digirad will create Series A non-convertible,
cumulative, perpetual preferred stock (“Series A Preferred Stock”)
that it will apply to list on Nasdaq with a stated value and
liquidation preference of $10 per share. In the Transaction,
ATRM shareholders will receive consideration consisting of 0.03
shares of Digirad Series A Preferred Stock for every ATRM common
share held, representing $0.30 of value, which is the approximate
price of ATRM stock since the potential acquisition was announced
on September 10, 2018. In addition, the Series B preferred
stock of ATRM will be exchanged for Series A Preferred Stock of
Digirad, with each share of Series B preferred stock of ATRM (with
a $25 liquidation preference) to be exchanged for 2.5 shares of
Digirad Series A Preferred Stock (with a $10 liquidation
preference). Digirad will not be issuing any common stock or
paying any cash for ATRM common or preferred shares. The
transaction is expected to close in the third quarter of 2019 after
approval by the common and preferred shareholders of ATRM.
The HoldCo structure’s team (after the ATRM
acquisition) will include Jeffrey Eberwein (Chairman of Digirad),
Matthew Molchan (CEO of Digirad Health, Inc.), Daniel Koch (CEO of
ATRM Holdings, Inc.), David Noble (Chief Operating Officer and
Chief Financial Officer of Digirad), and Hannah Bible (VP – Legal
for Digirad). In addition, Mr. Noble, who was appointed to
the position of Chief Operating Officer of Digirad on September 1,
2018 and named interim CFO on January 14, 2019, has been named
permanent CFO of Digirad.
The Transaction was approved by Digirad and
ATRM, respectively, by a special committee of independent directors
of each company, which then recommended that the respective board
of directors of each company approve the Transaction. The
Digirad Special Committee was advised by Oberon Securities,
LLC.
Digirad believes that converting into a
diversified holding company with a shared services center will
create significant value for Digirad stockholders over time because
the conversion is expected to improve future revenue, cash flow,
and earnings growth, and create a platform for future bolt-on
acquisitions and other growth opportunities.
About David Noble
Prior to being named Chief Operating Officer of
Digirad, Mr. Noble served as Managing Member of Noble Point LLC, a
business and financial advisory firm. He engaged in M&A
idea generation, as well as advised medical practices around
operations, growth opportunities, and financing. He has more
than 20 years of experience in investment banking and most recently
was Head of Equity Capital Markets (ECM) for the Americas at HSBC,
where he established the Latin American franchise and grew regional
revenues to account for a significant portion of their global ECM
business. Beyond his direct P&L responsibility, he
managed all aspects of the ECM business, which involved strategy,
forecasting and budgeting, finance, legal and compliance,
regulatory, HR, and IT. Mr. Noble earned an MBA in Finance
from MIT and a BA from Yale University.
About Digirad
Digirad designs, manufactures, and distributes
diagnostic medical imaging products. Digirad operates in 3
segments: Diagnostic Services, Mobile Healthcare, and Diagnostic
Imaging. The Diagnostic Services segment offers imaging and
monitoring services to healthcare providers as an alternative to
purchasing the equipment or outsourcing the job. The Mobile
Healthcare segment provides contract diagnostic imaging, including
computerized tomography ("CT"), magnetic resonance imaging ("MRI"),
positron emission tomography ("PET"), PET/CT, and nuclear medicine
and healthcare expertise through a convenient mobile service.
The Diagnostic Imaging segment develops, sells, and maintains
solid-state gamma cameras.
About ATRM Holdings
ATRM manufactures modular housing units for
commercial and residential applications. ATRM operates in two
segments: (i) modular building manufacturing and (ii) structural
wall panel and wood foundation manufacturing, including building
supply retail operations. The modular building manufacturing
segment is operated by KBS Builders, and the structural wall panel
and wood foundation manufacturing segment is operated by
EdgeBuilder. Both KBS Builders and EdgeBuilder are
wholly-owned subsidiaries of ATRM.
Forward-Looking Statements & Use of
Non-GAAP Measures
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements in this press release that
are not statements of historical fact are hereby identified as
“forward-looking statements” for the purpose of the safe harbor
provided by Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking Statements include, without
limitation, statements regarding (i) the plans and objectives of
management for future operations, including plans or objectives
relating to acquisitions and related integration, development of
commercially viable products, novel technologies, and modern
applicable services, (ii) projections of income (including
income/loss), EBITDA, earnings (including earnings/loss) per share,
free cash flow (FCF), capital expenditures, cost reductions,
capital structure or other financial items, (iii) the future
financial performance of Digirad (referred to herein as the
“Company”) or acquisition targets and (iv) the assumptions
underlying or relating to any statement described above. Such
forward-looking statements are not meant to predict or guarantee
actual results, performance, events or circumstances and may not be
realized because they are based upon the Company's current
projections, plans, objectives, beliefs, expectations, estimates
and assumptions and are subject to a number of risks and
uncertainties and other influences, many of which the Company has
no control over. Actual results and the timing of certain
events and circumstances may differ materially from those described
above as a result of these risks and uncertainties. Factors
that may influence or contribute to the inaccuracy of
forward-looking statements or cause actual results to differ
materially from expected or desired results may include, without
limitation, the Company's inability to obtain adequate financing,
the length of time associated with servicing customers, accounts
receivable turnover, insufficient cash flows and resulting
illiquidity, the Company's inability to expand the Company's
business, government regulation, the underlying condition of the
technology support industry, the lack of product diversification,
existing or increased competition, stock volatility and
illiquidity, the Company's failure to implement the Company's
business plans or strategies, changes in macro or industry specific
business conditions, failure to keep pace with evolving
technologies and difficulties integrating technologies, unfavorable
changes in reimbursement practices, negative economic outlooks, the
Company’s inability to consummate successful acquisitions and
execute related integration, the Company’s ability to execute on
its business strategy (including any cost reduction plans), the
Company’s failure to realize expected benefits of restructuring and
cost-cutting actions, the Company’s ability to preserve and
monetize its net operating losses, the continued demand for and
market acceptance of its services. For a detailed discussion
of cautionary statements and risks that may affect the Company’s
future results of operations and financial results, please refer to
the Company’s filings with the Securities and Exchange Commission,
including, but not limited to, the risk factors in the Company’s
most recent Annual Report on Form 10-K. This press release
reflects management’s views as of the date presented.
All forward-looking statements are necessarily
only estimates of future results, and there can be no assurance
that actual results will not differ materially from expectations,
and, therefore, you are cautioned not to place undue reliance on
such statements. Further, any forward-looking statement
speaks only as of the date on which it is made, and we undertake no
obligation to update any forward-looking statement to reflect
events or circumstances after the date on which the statement is
made or to reflect the occurrence of unanticipated events.
For more information
contact: |
Jeffrey E. Eberwein |
Chairman of the Board of
Directors |
203-489-9501 |
ir@digirad.com |
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