1-800 CONTACTS Announces Sale of ClearLab
May 29 2007 - 10:20AM
PR Newswire (US)
DRAPER, Utah, May 29 /PRNewswire-FirstCall/ -- 1-800 CONTACTS, INC.
(NASDAQ:CTAC) (the "Company") today announced that it has signed
agreements for the sale of its ClearLab business. The Company has
agreed to sell ClearLab's flat pack technology and certain other
intellectual property to Menicon Co., Ltd., Japan's largest
independent contact lens manufacturer. The Company has also agreed
to sell ClearLab's manufacturing, distribution and customer support
operations to Mi Gwang Contact Lens Co., Ltd., a Korean-based
contact lens manufacturer. (Logo:
http://www.newscom.com/cgi-bin/prnh/20040107/LACONTACTSLOGO )
Jonathan Coon, Chief Executive Officer, remarked, "We have been
working on these transactions for quite some time and are pleased
to announce that we have executed agreements with both Menicon and
Mi Gwang. These agreements are the result of an extensive strategic
review of ClearLab. This anticipated separation of ClearLab from
our US Retail business will allow management to focus time and
attention on growing our US Retail business." Mr. Coon continued,
"We have a longstanding relationship with Menicon because of the
license agreement we entered into in December 2004, and we feel
confident that Menicon is the right party to own and exploit the
flat pack technology. Likewise, we feel that Mi Gwang is the right
party to own ClearLab's ongoing manufacturing operations." Brian
Bethers, President, added, "At closing, these two transactions will
provide us with $32 million in cash and $6.5 million in Mi Gwang's
stock. In addition, we expect to receive from Menicon deferred cash
payments of up to $5 million upon Menicon reaching certain
milestones, as well as possible earn-out payments over a minimum
fifteen-year term. The additional cash consideration and earn-out
payments, if any, may not be received for several years until the
completion of the development of the flat pack technology and
regulatory approval process. However, we believe future earn-out
payments could exceed the consideration received at closing. We
further believe that these transactions may also result in a tax
benefit of up to $13 million. Proceeds at closing from the
transactions will be used to pay off debt and capital lease
obligations." Menicon Agreement Under the terms of the agreement,
Menicon will acquire certain intellectual property and other
assets, including those relating to the Company's flat pack
technology. The consideration to be paid includes a one-time
nonrefundable payment of $23 million at closing, deferred
consideration totaling $2 million upon Menicon's launch of flat
pack products in Japan, $3 million upon Menicon entering into a
license agreement with a third party outside of Japan, and earn-out
payments based on a percentage of Menicon's total sales of flat
pack products and a percentage of the total consideration payable
to Menicon pursuant to any license agreement for the flat pack and
certain other products. The term of the earn-out payments commences
upon the commercial launch of flat pack products anywhere in the
world and continues through the fifteenth anniversary of the launch
of flat pack products in Japan. As part of the agreement, Menicon
has agreed to continue prosecuting certain patent applications,
which it will acquire at closing. This transaction is expected to
close by June 22, 2007. In conjunction with the closing, the
parties will terminate their current license agreement. Mi Gwang
Agreement Under the terms of the agreement, Mi Gwang will acquire
the Company's international manufacturing, distribution and
customer support operations, including the Singapore manufacturing
facility, certain tangible property, intellectual property, other
assets, the outstanding capital stock of the UK entities and the
trade payables and current accrued liabilities related to the
Singapore operations. The consideration to be paid includes a
one-time nonrefundable payment of $9 million at closing and the
issuance at closing of $6.5 million in restricted Mi Gwang capital
stock. The Company is restricted from trading $6.0 million of the
Mi Gwang stock until twelve months after the closing and is
restricted from trading the remaining $500,000 until eighteen
months after the closing. The purchase price is subject to a
post-closing adjustment based on the closing net working capital of
the divested business, payable in cash if owed by Mi Gwang and
payable in Mi Gwang capital stock if owed by the Company. The
Company will retain certain liabilities, including ClearLab's
existing debt and capital lease obligations totaling approximately
$6.5 million as of March 31, 2007. In addition, the Company has
agreed to reimburse Mi Gwang for certain liabilities, including any
remaining costs associated with the closure of the United Kingdom
manufacturing operations and the consolidation in Singapore. This
transaction is expected to close by June 29, 2007. About 1-800
CONTACTS, INC. 1-800 CONTACTS offers consumers an attractive
alternative for obtaining replacement contact lenses in terms of
convenience, price, and speed of delivery. Through its
easy-to-remember, toll-free telephone number, "1-800 CONTACTS"
(1-800-266-8228), and its Internet web site,
http://www.1800contacts.com/, the Company sells all of the popular
brands of contact lenses. 1-800 CONTACTS offers products at
competitive prices, while delivering a high level of customer
service. ClearLab develops and manufactures a wide range of
disposable contact lens products and distributes these lenses in
markets outside of the United States. More information about
ClearLab can be found at its website, http://www.clearlab.com/.
About Menicon Co., Ltd. Menicon Co., Ltd.
(http://www.menicon.com/), founded by Mr. Kyoichi Tanaka in 1951,
is the largest independent contact lens manufacturer in Japan and
the only manufacturer in the world dedicated to all areas of
contact lens related businesses including development and
manufacturing of hyper-Dk GP Lenses, silicone hydrogel lenses, and
multi purpose lens care solutions. About Mi Gwang Contact Lens Co.,
Ltd Mi Gwang is one of the leading contact lens manufacturers in
Korea. Mi Gwang is publicly traded on the Korea Stock Exchange.
More information can be found at its website,
http://www.migwang.com/ or at the Korea Exchange website,
eng.krx.co.kr (ticker: 066850). Forward-looking Statements This
press release contains a number of statements about the Company's
future business prospects which are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements include all statements
which are not purely historical and include, but are not
necessarily limited to, all statements relating in any way to the
transactions with Menicon and Mi Gwang; the anticipated closing
dates of each transaction; the anticipated consideration to be paid
by Mi Gwang and Menicon; all post-closing obligations of the
Company, Menicon, or Mi Gwang; and the anticipated tax benefits.
All such forward-looking statements are based upon information
available to the Company as of the date hereof, and the Company
disclaims any intention or obligation to update any such
forward-looking statements. Actual results could differ materially
from current expectations. Factors that could cause or contribute
to such differences include, among others, the risks and
uncertainties identified in the reports filed from time to time by
the Company with the U.S. Securities and Exchange Commission,
including the Company's most recent Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q. Information on the Company's
websites, other than the information specifically referenced in
this press release, shall not be deemed to be part of this press
release.
http://www.newscom.com/cgi-bin/prnh/20040107/LACONTACTSLOGO
http://photoarchive.ap.org/ DATASOURCE: 1-800 CONTACTS, INC.
CONTACT: Brian W. Bethers, President, or Robert G. Hunter, CFO,
both of 1-800 CONTACTS, INC., +1-801-316-5000, Web site:
http://www.contacts.com/
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