Medical House in Eurocut deal
THE Medical House, the group best known for needle-free injection kits, has signed a deal to sell its loss-making engineering subsidiary Eurocut.
The move, which allows the Sheffield company to focus on its profitable drug delivery operations, sees Eurocut managing director Stephen Shaw buy the business in a deal worth £3.7m.
Mr Shaw's firm Semes has acquired Eurocut which made operating losses of £856,000 in the year to June 30 2007.
The move sees The Medical House (TMH) left debt-free as Eurocut's £1.4m of debts are included in the sale.
Chairman Ian Townsend said the deal would put the company in its strongest ever financial position and he was "excited" about its prospects for 2008.
"Although we are sorry to see Eurocut leave the group, we are delighted that this transaction puts TMH on a much sounder financial footing. It effectively
draws a line under a difficult situation which has persisted for the past 18 months. This deal eliminates the risk of TMH incurring further losses which
might result from Eurocut's somewhat unpredictable order profile, whilst still allowing TMH shareholders to benefit from Eurocut's future success.
"The deal also allows us to concentrate all our efforts on designing, developing and licensing medical device technologies, where we already have a considerable record of success.
Mr Townsend added: "We will be starting 2008 in our best ever financial position and are very excited about our future prospects."
He will now be hoping that the sale of Eurocut plus the £34m six-year deal TMH secured earlier this year with an unnamed major global pharmaceutical company to provide an auto injector for a new drug will help boost its shares which have dropped from more than 80p in 2005 to 19.5p today.
TMH has turned around its bank financing over the last four months and now has a "modest bank overdraft" and no long-term debt.
Most of the money received by TMH from the sale of Eurocut is for an inter-company loan of £2.9m.
If Eurocut is sold in the future then TMH will receive 25% of anything paid above £3.7m.
