Breaking News

Tweet TWEET

Alphatec Holdings and OrthoTec, LLC Mutually Agree to Settle Ongoing Litigation

Alphatec Holdings and OrthoTec, LLC Mutually Agree to Settle Ongoing Litigation  Settlement Will Resolve All Ongoing Litigation and Release All Claims Against Alphatec and Surgiview  CARLSBAD, Calif., March 17, 2014 (GLOBE NEWSWIRE) -- Alphatec Holdings, Inc. (Nasdaq:ATEC), the parent company of Alphatec Spine, Inc., a medical device company that provides physician-inspired solutions for patients with spinal disorders, announced that it has entered into a binding term sheet to settle the OrthoTec, LLC vs. Surgiview S.A.S. legal matter.  This settlement will result in mutual releases of all claims and the dismissal of the case in the Superior Court of California, Los Angeles County and all other related litigation matters involving the Company, its directors and affiliates.  Under the terms of the settlement, Alphatec has agreed to pay OrthoTec $49 million over the next 7 years in cash, with an initial cash payment of $17.5 million. The remaining $31.5 million will be paid to OrthoTec in installments of $1.1 million paid quarterly, beginning in the fourth quarter of 2014. In addition, a 7% simple interest rate will accrue on the unpaid portion of the $31.5 million. All accrued interest is not payable until the $49 million is paid, and such accrued interest shall be paid in $1.1 million installments each quarter.  The parties anticipate entering into a long-form agreement that complies with the term sheet.  The Company also announced today that it has entered into a secured loan facility with affiliates of Deerfield Management Company to provide the Company with up to $50 million in financing, at the Company's option.The financing can be used to satisfy certain obligations arising out of the OrthoTec settlement and, upon the achievement of disbursement conditions, to provide growth capital to the Company.This facility is subordinate to the Company's existing credit facility with MidCap Financial.  "While we continue to believe strongly in our position with respect to this litigation, this settlement removes a future uncertainty in our business and eliminates further distraction and extensive investment of human and financial resources associated with continuing with a lengthy legal process," said Les Cross, Chairman and CEO of Alphatec Spine."We are confident in our ability to meet this obligation given the structure of the settlement and our future cash flow projections, supplemented with additional funding from Deerfield.With this behind us we are able to focus our full attention on strengthening and growing our business based on the strong foundation and momentum we have established," added Mr. Cross.  Under the terms of the new Deerfield facility, the Company has the option to draw up to $50 million in one or more increments prior to January 30^th, 2015.The initial draw on the facility must be used in connection with the OrthoTec settlement.The secured loan facility matures in five years and accrues interest at a rate of 8.75% per annum, payable quarterly. In connection with the execution of the facility, the Company issued Deerfield 6.25 million warrants that have an exercise price of $1.39 per share.In addition, the Company will issue an additional 10 million warrants on a pro rata basis as the facility is drawn down.With each disbursement, Deerfield will receive a transaction fee equal to 2.5% of the amount disbursed.  "Deerfield has demonstrated its commitment to Alphatec's future potential and we value the continued support that they are providing through this additional financial investment," said Les Cross."We also want to acknowledge and appreciate the strong ongoing partnership with MidCap Financial and their endorsement of this additional loan facility.Their continued support as we assume this additional financial obligation demonstrates their commitment to our current and future business objectives."  "Deerfield has been a long-term investor in Alphatec and is supportive of the Company's growth plan.Our goal with this facility is to help Alphatec move beyond this legal matter and to provide additional capital for managing its growth," stated Steve Hochberg, a partner at Deerfield Management.  About Alphatec Spine  Alphatec Spine, Inc., a wholly owned subsidiary of Alphatec Holdings, Inc., is a medical device company that designs, develops, manufactures and markets physician-inspired products and solutions for the treatment of spinal disorders associated with trauma, congenital deformities, disease and degeneration. The Company's mission is to combine innovative surgical solutions with world-class customer service to improve outcomes and patient quality of life. The Company and its affiliates market products in the U.S. and in over 50 countries internationally via a direct sales force and independent distributors.  Additional information can be found at www.alphatecspine.com.  About Deerfield Management Company  Deerfield is an investment management firm, committed to advancing healthcare through investment, information and philanthropy. For more information about Deerfield, please visit www.deerfield.com.  Forward Looking Statements  This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainty. Such statements are based on management's current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward looking statements. Alphatec Spine cautions investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors. Forward looking statements include references to Alphatec Spine's 2013 growth, revenue, and adjusted EBITDA projections; the Company's ability to take advantage of the maximum amount of its new credit facility, the Company's ability to meet its financial obligations in connection with the OrthoTec Settlement while still funding its ongoing operational and commercial activities. Please refer to the risks detailed from time to time in Alphatec Spine's SEC reports, including its Annual Report Form 10-K for the year ended December 31, 2012, filed on March 4, 2013 with the Securities and Exchange Commission, as well as other filings on Form 10-Q and periodic filings on Form 8-K. Alphatec Spine disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law.  CONTACT: Investor/Media Contact:                   Christine Zedelmayer          Investor Relations          Alphatec Spine, Inc.          (760) 494-6610          czedelmayer@alphatecspine.com  Alphatec Spine  
Press spacebar to pause and continue. Press esc to stop.