CryoLife Announces Definitive Agreement to Acquire JOTEC - Seite 3

Under terms of the definitive agreement, CryoLife will acquire JOTEC for an upfront payment of $225 million, subject to certain adjustments, consisting of 75 percent in cash and 25 percent in CryoLife common stock issued to JOTEC's shareholders.  CryoLife expects to finance the transaction and related expenses, as well as refinance its existing $69 million term loan, with new $255 million senior secured credit facilities, consisting of a $225 million institutional term loan B and a $30 million undrawn revolving credit facility, $56.25 million in CryoLife common stock, and available cash on hand.  The senior secured credit facilities are fully underwritten by Deutsche Bank, Capital One and Fifth Third Bank, and are expected to be syndicated to investors prior to closing of the acquisition.

The definitive agreement has been approved by both companies' boards of directors.  The transaction is expected to close later this year, subject to customary closing conditions.

Financial Commentary

Third quarter revenues were adversely affected due to the impact of the recent hurricanes on our business in Florida and Texas, which we estimate to be approximately $1.0 million, and additionally due to the continued delay in obtaining the re-certification of our AAP.  Including the impact of these factors, third quarter revenue was approximately $45.1 million, compared to our third quarter revenue guidance of between $46.5 and $47.5 million.  In addition, in connection with the transaction, CryoLife notified certain of its distributors that it had elected to terminate its relationship with those distributors based on a decision to distribute product through the to be combined Company's direct sales channel.  As a result of this decision, at the end of the respective contract terms, CryoLife will be buying back a portion of the inventory that was previously sold to these distributors, which will result in a $1.1 million third quarter reversal of previously recorded revenues.  Considering all of these factors, preliminary third quarter revenues were approximately $44.0 million.  Additional revenue reversals and revisions to the third quarter estimates are possible in subsequent quarters.