Thursday, October 11, 2012

Elbit Imaging Ltd. (EMITF) Announces $31.4 Million Investment Agreement Between InSightec and GE

Today, Elbit Imaging Ltd. announced that on Oct. 10, Elbit Medical Technologies Ltd. (90 percent held by Elbit Imaging) and InSightec Ltd. (64.3 percent held by Elbit Medical and 53 percent held on a fully diluted basis) entered into a share purchase agreement with GE Healthcare and certain other shareholders of InSightec. Pursuant to the investment agreement, GE and the other investors will invest an amount totaling around $31.4 million in InSightec.

According to the main terms of the transaction, GE will invest $22.5 million in cash and convert its $5 million convertible loan, which it provided to InSightec in June of 2012, in exchange for InSightec’s series C preferred shares. The other investors will simultaneously invest around $3.9 million in cash in consideration for InSightec’s series C preferred shares. GE and Elbit Imaging will also convert all outstanding shareholder loans that have been granted to InSightec into InSightec’s B-1 preferred shares, in accordance with the terms of those kinds of loans.

This transaction reflects a post-money valuation of about $104.6 million for InSightec, or a pre-money valuation of $75 million. GE and InSightec, as part of the agreement, have reached written understandings regarding the commercial relationship between them, including the distribution and marketing of InSightec’s products, development of those products to make them exclusively fit GE’s MRI for a certain period of time, mutual technical assistance, grant of licenses, and other considerations. This will be recorded in a definitive technology, co-operation, and distribution agreement. The finalization of the transaction will be subject to several conditions, including receipt of certain regulatory approvals and the execution of the definitive technology, co-operation, and distribution agreement.

Once the transaction has closed, Elbit Medical’s holdings in InSightec will be reduced to about 48 percent and 41 percent on a fully diluted basis. Elbit Medical will also no longer have the right to appoint the majority of InSightec’s directors and will, therefore, cease to consolidate InSightec’s financial statements. Additionally, it is anticipated that Elbit Medical will record a significant – but at this time indeterminable – gain when the transaction closes.

After the initial closing of the transaction, pursuant to the investment agreement and for a period of 90 days afterward, Elbit Imaging will have the option to purchase all the series C preferred shares of InSightec that were purchased by GE and its affiliates for $22.5 million in cash, as well as all or any portion of the series C preferred shares, in consideration of cancellation of indebtedness of Elbit Imaging by GE (amounting to $5 million) plus accrued interest at the time of the conversion. Any purchase would take place following a separate purchase and sales agreement at the series C purchase price per share for both purchased shares and conversion shares.

Elbit Imaging operates in the principal business fields of commercial and entertainment centers, U.S. real property, hotels, medical industries, residential products, fashion apparel, and other activities, including venture capital investments and potential investments in hospitals and farm and dairy plants in India. The company is currently suspending its investment activities in hospitals and farm and dairy plants in India until the economy has sufficiently recovered so that these activities can be resumed.

For more information, visit the company’s Web site at www.elbitimaging.com

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