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Monday 24 October 2016

GC Aesthetics postpones planned $75m Nasdaq float

Indefinite postponement is due to turbulent stockmarket conditions

Published 16/08/2015 | 02:30

Serial investor Bill McCabe
Serial investor Bill McCabe

GC Aesthetics, the Irish breast implant manufacturer backed by e-learning pioneer Bill McCabe, has postponed a proposed Nasdaq listing set for this month.

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The indefinite postponement was made due to turbulent market conditions, the Sunday Independent understands.

The company announced plans to float at the end of June, describing itself in a document filed to the Securities Exchange Commission in the US as a "leading pure-play female aesthetics company committed to becoming the trusted brand and partner for women seeking to look healthy, youthful, vibrant and beautiful, and to feel confident about themselves throughout their lifetime".

Reports had suggested it would seek to raise $75m. BofA Merrill Lynch, Deutsche Bank Securities and Cowen and Company were acting as joint book-running managers for the proposed offering and William Blair was acting as co-manager.

It had been thought that shares would be priced in the $13 to $15 range.

After the announcement, CEO Ayse Kocak told the Sunday Independent that floating would help the company to achieve its vision more quickly. It said it wanted to expand into emerging markets, including China, where the currency was devalued last week, making imports more expensive, and Thailand.

It added that in the second half of this year it wanted to launch new products including an "enhanced breast boost pack".

"This non-invasive product, comprising a specialised bra and silicone breast forms, allows women to experience the look and feel of fuller breasts instantly, and we believe this will lead to an increase in the number of women considering surgical augmentation and consulting surgeons," the documents said.

The company also said it wanted to launch scar management products that "minimise the appearance of post-surgery scars and help us build upon our existing relationships with surgeons and access other market channels".

GC Aesthetics has incurred significant net operating losses. As of December 31, 2014, it had an accumulated deficit of $183.5m. It made a net loss of almost $90m last year, on revenues of almost $53m.

"The extent of our future net operating losses and the timing of profitability are uncertain," the company warned in its SEC filing.

"We will need to increase our sales significantly to achieve profitability, and we might not be able to do so. Even if we do significantly increase sales, we might not be able to achieve, sustain or increase profitability on a quarterly or annual basis in the future."

"If we do not achieve profitability, it will be more difficult for us to finance our business, accomplish our strategic objectives and our financial performance and results of operations may be materially adversely affected."

The documents also contained a poison pill for potential investors, in the form of a potential "accelerated paydown" of a €53m debt package owed to healthcare fund manager Orbimed.

The acceleration will be triggered if an entity not affiliated to private equity firm Montreux or Bill McCabe's Oyster Capital acquires 35pc or more of the company's share capital.

"If we decide or are required to repay the loans under the credit facility before their maturity dates, we are obligated to pay a prepayment penalty equal to 10pc of the principal amount pre-paid plus an additional fee based on the date of prepayment," the prospectus lodged with the SEC reads.

"We also would be required to make cash-interest payments on any portion of such an accelerated repayment.

"The credit facility is subject to acceleration upon certain defaults and in the event any person or group, excluding Montreux, Oyster and their respective affiliates, acquires 35pc or more of our share capital."

The company is headquartered in Dublin and manufactures its implants at facilities in the UK and France.

Belfast-born McCabe is one of this country's most successful entrepreneurs. He floated e-learning company CBT on the Nasdaq and his Oyster group has taken stakes in companies including John Mullins' solar energy business Amarenco, FieldAware (which develops mobile applications used by workers in the field) and US-based Novaerus, a company that specialises in air sterilisation systems for healthcare solutions.

Sunday Indo Business

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