Rochester Medical Corporation Announces Agreements in Principle for Key Strategic Opportunities
April 03 2006 - 9:45AM
PR Newswire (US)
STEWARTVILLE, Minn., April 3 /PRNewswire-FirstCall/ -- Rochester
Medical Corporation (NASDAQ:ROCM) today announced it has reached
agreements in principle with Coloplast A/S and with Mentor
Corporation in connection with Mentor's potential sale of its
urology product line to Coloplast that was announced on March 27,
2006. First, Rochester Medical has agreed in principle to acquire
certain assets of Coloplast and Mentor related to sales of Male
External Catheters (MECs) in the United Kingdom. These assets will
include the right to sell in the UK Clear Advantage(R), Freedom(R),
Freedom Plus(R), and Transfix(R) brands of MECs. They also include
Mentor Medical Limited's UK Dispensing Appliance Contractor License
and its sales offices and warehouse facility in Lancing, England.
At the conclusion of this acquisition the facility will house
Rochester Medical UK, LTD, a newly formed subsidiary which will be
staffed with Rochester Medical personnel to market and sell the
MECs as well as all of Rochester Medical's current product lines of
MECs, Intermittent Catheters, and Foley Catheters. Coloplast will
continue to market its own male external catheter products in the
UK under the "Conveen" brand. Under the agreement in principle,
Rochester Medical will pay approximately $16 million for the
acquired assets, of which $10 million will be payable at closing
and $6 million will be payable in installments over 3 years.
Rochester Medical also announced today that Coloplast and Rochester
Medical have agreed in principle to enter into a Global Supply
Agreement under which Rochester Medical will supply silicone MECs
to Coloplast which will be sold under Coloplast's brands worldwide
excepting the UK. Coloplast will supply Rochester Medical with its
requirement of latex MECs which Rochester Medical will sell in the
UK under its newly acquired Freedom(R) and Freedom Plus(R) brands.
Rochester Medical also announced today that it has agreed to
acquire the business assets of Mentor Corporation's Anoka, MN
Silicone Male External Catheter Manufacturing Facility. Rochester
Medical will purchase the ongoing supply business, all equipment
and existing inventory for an amount less than $2 million, and will
lease the 20,000 sq. foot facility from Mentor. As a part of the
asset acquisition, Mentor will convey or re-convey to Rochester
Medical all intellectual property exclusively related to the
manufacture and sale of silicone MECs at the Anoka facility. At the
completion of the contemplated transactions, the existing
arbitration between Mentor Corporation and Rochester Medical will
be dismissed and the parties will execute a mutual general release.
Closing of the contemplated transactions described above is subject
to and would coincide with Mentor's acceptance of Coloplast's offer
to buy Mentor's Urology Business and the completion of definitive
documents and satisfaction of certain closing conditions. For
details of the announced potential transaction between Mentor and
Coloplast, visit their websites at http://www.coloplast.com/ and
http://www.mentorcorp.com/ . Commenting on today's announcements,
Rochester Medical CEO and President Anthony J. Conway said, "These
agreements would propel Rochester Medical Corporation to a new
level of success. If these contemplated Agreements are consummated,
we expect Rochester Medical UK, LTD will sell significant volumes
of Male External Catheters and will begin building branded sales
for our entire product line, including MECs, Intermittent Catheters
and Foley Catheters. "We also see the new Global Supply Agreement
with Coloplast as being very beneficial to Rochester Medical.
Coloplast is a recognized market leader with a strong presence
throughout the world and now, along with their own products, they
would be selling MECs made by Rochester Medical. "These
contemplated Agreements, if consummated, will significantly
strengthen Rochester Medical's revenues and its earnings. I expect
these contemplated Agreements when finalized to result in
significant immediate sales revenue growth exceeding $8 million
dollars annually. Most of that increase will be from sales of
Rochester Medical branded MECs and other branded products in the
United Kingdom. We also expect improvements in gross profit
margins, which coupled with increased revenues, would result in
significantly higher earnings for the Company." Conway concluded,
"I am extremely pleased with this news and I look forward to
continued progress and success." Commenting on the contemplated
agreements, Martyn Sholtis, Rochester Medical Corporate Vice
President and Worldwide Head of Sales said, "The immediate increase
in sales expected from this transaction and the enhanced margins
are very clear benefits. We are also excited about the long term
opportunities provided by our direct presence in the European
marketplace." Group Director Carsten Lonfeldt of Coloplast/AS says,
"I am optimistic that we will reach a final agreement which adds
value for all three parties, and satisfied that Coloplast will
continue to market its own male external catheter products in the
UK, which include the 'Conveen' range, incorporating the newly
launched non-latex 'Optima' product." Rochester Medical has
scheduled a conference call today at 3:30 p.m., C.T. regarding this
announcement. The call is being webcast by Thomson/CCBN and can be
accessed at Rochester Medical's website at http://www.rocm.com/ .
To listen to the conference call via telephone, call:
1-800-329-9097, password 75504029 Replay will be available for
seven days at: http://www.rocm.com/ or via telephone at
1-888-286-8010, password 65897165. The immediately preceding
statement contains forward-looking statements that involve risks
and uncertainties, including the uncertainty of the Agreements with
Coloplast and Mentor being finalized, including the uncertainty of
estimated revenues and profits, as well as the uncertainty of
market acceptance of new product introductions, the uncertainty of
gaining new strategic relationships, the uncertainty of timing of
private label sales revenues (particularly international
customers), FDA and other regulatory review and response times, and
other risk factors listed from time to time in the Company's SEC
reports and filings, including, without limitation, the section
entitled "Risk Factors" in the Company's Annual Report on Form 10-K
(Part II, Item 6) for the year ended September 30, 2005. Rochester
Medical Corporation develops, manufactures, and markets latex- free
disposable medical catheters and devices for urological and
continence care applications. The Company markets under its own
Rochester Medical(R) brand and under existing private label
arrangements. For further information, please contact Anthony J.
Conway, President and Chief Executive Officer of Rochester Medical
Corporation at (507) 533-9600. More information about Rochester
Medical is available on its website at http://www.rocm.com/ .
DATASOURCE: Rochester Medical Corporation CONTACT: Anthony J.
Conway, President and Chief Executive Officer, Rochester Medical
Corporation, +1-507-533-9600 Web site: http://www.coloplast.com/
http://www.mentorcorp.com/ http://www.rocm.com/
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