INTRICON CORPORATION (NASDAQ:IIN) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
The information contained in Item 2.01 and Item 2.03 of this Form 8-K is incorporated by reference herein.
On May 18, 2020, IntriCon Pte. Ltd. (“Buyer”), a wholly-owned subsidiary of IntriCon Corporation (the “Company”), acquired all of the outstanding shares of Emerald Medical Services Pte., Ltd., a Singapore company (“Emerald”), to a Share Purchase Agreement dated the same date among Buyer, Emerald and the direct and indirect owners of Emerald. Emerald, based in Singapore, is a provider of joint development medical device manufacturing services for complex catheter applications. The Share Purchase Agreement provides for a purchase price consisting of:
The information set forth in this Item 2.02, including Exhibit 99.1 attached hereto, should not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
On May 19, 2020, the Company announced, among other items, earnings for the quarter ended March 31, 2020. A copy of the press release is furnished with this Current Report as Exhibit 99.1 and is incorporated herein by reference.
Amendment to Credit Facility
On May 13, 2020, the Company and its domestic subsidiaries, referred to as “borrowers,” entered into a Fourteenth Amendment to Loan and Security Agreement and Waiver (the “Fourteenth Amendment”) with CIBC Bank USA. The Fourteenth Amendment, among other things:
On May 15, 2020, the management of the Company committed the Company to, and began executing on, a strategic restructuring plan designed to accelerate the Company’s future growth by focusing resources on the highest potential growth areas. The plan, which was supported by the Company’s Board of Directors, is expected to be completed by the end of the 2020 second quarter.
Following the Company’s decision last quarter to no longer pursue a direct-to-consumer approach to the hearing health market, we recently made the decision to transition our remaining direct-to consumer operations at Hearing Help Express to solely support our partnership initiatives. In addition, while continued uncertainties remain from the COVID-19 pandemic, we are taking many significant steps to decrease our expenditure profile and current spending run-rate. The following are significant items included in our strategic restructuring plan:
The information set forth above in Item 2.05 is hereby incorporated into Item 2.06 by reference.
The information set forth in this Item 7.01, including Exhibit 99.1 attached hereto, should not be deemed “filed” for purposes of Section 18 of the Exchange Act.
On May 19, 2020, the Company announced: (i) earnings for the quarter ended March 30, 2020, (ii) its strategic restructuring plan, (iii) the Emerald acquisition and (iv) the Fourteenth Amendment to its credit facility. A copy of the press release is furnished with this Current Report as Exhibit 99.1 and is incorporated herein by reference.
Additionally, on May 19, 2020, the Company issued a more detailed press release regarding the Emerald acquisition. A copy of that press release is furnished with this Current Report as Exhibit 99.2 and is incorporated herein by reference.
The Company is supplementing the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission on March 16, 2020, and in its Current Report on Form 8-K filed with the Securities and Exchange Commission on May 8, 2020, with the following risk factor:
We recently acquired Emerald Medical Services and we may explore other acquisitions that complement or expand our business. Acquisitions pose significant risks and may materially adversely affect our business, financial condition and operating results.
In May 2020, we acquired all of the outstanding shares of Emerald Medical Services, a company incorporated and based in Singapore. Emerald Medical Services represents a new and exciting business opportunity; however, we do not have any prior experience in the complex medical catheter business, and we may not be able to successfully integrate or profitably operate this business, which may result in our not realizing the value paid for the acquisition. We expect to record goodwill and intangible assets in connection with the acquisition, and if we are not able to realize the value paid, it could lead to impairment of the assets acquired, for which we would need to recognize an expense charge. Our success will be largely influenced by management’s ability to hire and retain skilled personnel and determine the proper customer base and marketing channels to achieve our planned profitability levels.
As part of our business strategy, we may in the future pursue acquisitions of other businesses or technologies that we believe could complement, enhance or expand our current business or product lines, diversify our revenue base or that might otherwise offer us growth opportunities. We may have difficulty finding these opportunities or, if we do identify these opportunities, we may not be able to complete the transactions for various reasons, including a failure to secure financing.
The Emerald Medical Services acquisition, and any other transactions that we are able to identify and complete, involve a number of risks, including: the diversion of our management’s attention from our existing business to integrate the operations and personnel of the acquired or combined business or joint venture; possible adverse effects on our operating results during the integration process; unanticipated liabilities and litigation; and our possible inability to achieve the intended objectives or achieve the anticipated benefits of the transaction. In addition, we may not be able to successfully or profitably integrate, operate, maintain and manage our newly acquired operations or employees. Future acquisitions also may result in dilutive issuances of equity securities or the incurrence of additional debt.
Forward-Looking Statements
Statements made in this Current Report on Form 8-K or in the press release that is furnished with this Current Report that are not historical facts or that include forward-looking terminology, including estimates of future results, the impact of the Emerald acquisition, statements regarding the estimated costs and expenses of the restructuring and estimated annual expense savings, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be affected by known and unknown risks, uncertainties and other factors that are beyond the Company’s control, which may cause the Company’s actual results, performance or achievements to differ materially from the results, performance and achievements expressed or implied in the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to: impacts of the COVID-19 pandemic and measures taken in response, the risks associated with the Emerald acquisition, the actual number of employee headcount reductions in our strategic restructuring, the results of our lease negotiations, actual cash expenditures that may be made by the Company in connection with the reduction in force and the amount, use and impact of any savings generated by the reduction in force and restructuring. Additional risks, uncertainties and other factors are detailed from time to time in the Company’s filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended December 31, 2019, the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 8, 2020 and this Current Report on Form 8-K. The Company disclaims any intent or obligation to publicly update or revise the forward-looking statements, regardless of whether new information becomes available, future developments occur or otherwise.
(a) Financial statements of businesses acquired.
Any required financial statements will be filed as an amendment to this Form 8-K as soon as practicable, but not later than August 3, 2020.
(b) Pro forma financial information.
Any required pro forma financial information will be filed as an amendment to this Form 8-K as soon as practicable, but not later than August 3, 2020.
(d) Exhibits.
| 2.1 | Share Purchase Agreement dated as of May 18, 2020 among IntriCon Pte. Ltd. , a wholly-owned subsidiary of IntriCon Corporation, Emerald Medical Services Pte., Ltd., a Singapore company (“Emerald”), and the direct and indirect owners of Emerald |
| 10.1 | Fourteenth Amendment to Loan and Security Agreement and Waiver among the Company, IntriCon, Inc., Hearing Help Express, Inc., and CIBC Bank USA (formerly known as The PrivateBank and Trust Company), dated as of May 13, 2020. |
| 10.2 | Amended and Restated Revolving Note from the Company, IntriCon, Inc. and Hearing Help Express, Inc. to CIBC Bank USA (formerly known as The PrivateBank and Trust Company), dated May 13, 2020. |
| 99.1 | Press Release dated May 19, 2020. |
| 99.2 | Press Release dated May 19, 2020 regarding the Emerald Acquisition. |
INTRICON CORP Exhibit
EX-2.1 2 intricon200838_ex2-1.htm EXECUTION VERSION Exhibit 2.1 EXECUTION VERSION Share Purchase Agreement in relation to the acquisition of the entire issued share capital of Emerald Medical Services Pte. Ltd. Dated 18 May 2020 (1) Intricon Pte. Ltd. (2) Emerald Apex Pte. Ltd. (3) Michael Joseph O’Connor (4) River Source Medical Pte. Ltd. (5) Mark Albert Kempf (6) Steven Paul Wiesner (7) Emerald Medical Services Pte. Ltd. EXECUTION VERSION Contents Page 1 Interpretation 4 2 Sale and purchase of the Shares 4 3 Consideration 5 4 Post-signing actions 10 5 Restrictive Covenants 10 6 Signing 12 7 Warranties 13 8 Limitation of liability 15 9 Indemnities 15 10 Remedies and Waiver 15 11 Sellers’ and Seller Individuals’ liability 16 12 Announcements and confidentiality 16 13 Assignment and novation 18 14 Invalidity 18 15 Costs 19 16 Grossing-up of indemnity payments 19 17 Entire agreement 19 18 Reasonableness 19 19 Variation 19 20 Partnership 20 21 Effect of signing and Completion 20 22 Notices 20 23 Third party rights 21 24 Further assurance 21 25 Counterparts 22 26 Governing law and dispute resolution 22 Schedule 1 Definitions 23 EXECUTION VERSION Schedule 2 The Sellers and the Seller Individuals 32 Schedule 3 The Group 34 Part 1 – Details of the Company 34 Part 2 – Details of the Subsidiaries 35 Schedule 4 Signing deliverables 36 Schedule 5 Warranties 38 Schedule 6 Limitation of liability 56 Schedule 7 Earn-Out Payments,…
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About INTRICON CORPORATION (NASDAQ:IIN)
IntriCon Corporation is engaged in designing, developing, engineering, manufacturing and distributing body-worn devices. The Company operates through body-worn device segment. The Company serves the body-worn device market by designing, developing, engineering and manufacturing micro-miniature products, microelectronics, micro-mechanical assemblies, complete assemblies and software solutions, primarily for the value hearing health market, the medical bio-telemetry market and the professional audio communication market. The Company has facilities in Minnesota, California, Singapore, Indonesia, the United Kingdom and Germany, and operates through its subsidiaries. The Company’s product offering includes a hearing aid discount program for health plans. This program is available around the nation to health insurers, including employer-sponsored, individual and Medicare plans. The Company also has various international value hearing aid (VHA) initiatives.