Updated to include comment from CEO Darin Hammers.
Cogentix Medical (NSDQ:CGNT) said today it inked a $25 million securities purchase agreement with Accelmed Growth Partners.
Through the deal, Accelmed will buy $25 million in Cogentix Medical common stock at $1.55 per share. Funds are slated to support working capital and to implement a business development strategy to acquire growth tech which addresses the urology market.
The investment means a lot more than just its monetary value, CEO Darin Hammers told MassDevice.com in an interview.
“It means a lot. It’s not just the fact that they’re putting $25 million into the organization, they have a history of finding innovative technologies and marrying them with established commercial channels. That was very appealing to us becasue they are Israel’s premier venture capital group and have a history of doing exactly what we were looking to do,” Hammers said.
The move is part of an overall strategy looking to put the company’s books straight and add to its portfolio of urology products, Hammers commented.
“What we’ve been really focusing on over the last year is, how do we fix the balance sheet and how do we bring new products into the organization. The opportunity to join to Accelmed, who has a history of doing this made a lot of sense for us. They came in with $25 million at a 30% premium and it improved our balance sheet considerably and gives us a platform to go out and find new products we can add to the existing sales force and can execute at a high level,” Hammers said. “We’re looking for innovative, urology based products that can be used in the office or the operating room.”
As part of the funding transaction, Accelmed will nominate 2 members to Cogentix’s medical board of directors, including Accelmed director Uri Geiger, who is set to become board chair.
“It’s an exciting time for the company to be able to create better shareholder value because of what we’ve been able to do from a financing perspective and by cleaning up our balance sheet,” Hammers said.
“We have admired the revenue growth of Cogentix Medical under the leadership of Darin and his team, and believe that with the appropriate resources and a well-planned business development strategy, Cogentix could expand into being one of the leaders in the urology marketplace. As a reflection of our confidence in the management team as well as the potential for the company, we have agreed to make this investment at a premium to the current market price and look forward to working with the board and management to execute on a shared vision for Cogentix,” Accelmed director and new Cogentix board chair Geiger said in a press release.
Cognetix said it will convert $29.5 million in outstanding debt and accrued interest owed to class I director Lewis Pell to common stock at $1.67 per share.
In May, Cogentix said it entered into a settlement agreement as a result of a proxy war which resulted in former board chair and CEO Robert Kill resigning, with former COO Darin Hammers taking over as CEO.
Along with Kill’s resignation, board directors Kevin Roche and Ken Paulus also stepped down, with Lewis Pell and James D’Orta joining the board.
As part of the settlement agreement, the Minneapolis, Minn.-based company said its board will “use best efforts” to nominate 2 new outside, independent directors for its board.
