ABT Molecular Imaging, Inc., a Louisville-based medical imaging company, filed for chapter 11 protection this morning.
ABT’s filings state that it designs, manufactures and distributes the world’s first and only smallfootprint Biomarker Generator (“BG-75”) for Fludeoxyglucose (18F) (“FDG”). What is that, you ask? It is the imaging agent used in positron emission tomography (“PET”).
Still confused? Wikipedia explains. In medicine, a biomarker is something that doctors can use as a measurable indicator of the severity or presence of a particular disease. And PET is a new type of imaging biomarker that they can use to measure where in the body cells take up glucose. Why is that important? Because glucose is present at inflammation sites, and also because tumors take up a lot of glucose.
So ABT has developed BG-75, which a really efficient way for its customers to use PET biomarkers to locate inflammation sites and tumors. It developed BG-75 in 2009, delivered its first unit to a well-known medical university in 2011, and has taken orders for 23 additional units to customers across five continents. The sale of one BG-75 also generates around $175,000 in recurring annual consumables and service revenue streams over the life of the system. And annual service contracts average revenue of $80,000 per year. In combination, the company has historically generated approximately $1.3 million of incremental revenue per BG-75 over the five-year period following installation. Sounds great, right?
The Bankruptcy Filing
Unfortunately, ABT’s finances are deeply troubled. It reports consolidated sales of $5,403,000 for 2017, but a net loss of $5,516,000. Its assets have a net book value of roughly $2.5 million, but it has total liabilities of approximately $30 million. Consequently, ABT filed its bankruptcy case to adjust its balance sheet, or if that doesn’t work, to sell the company to a qualified purchaser. SSG Capital Advisors is its investment banker.
ABT’s Capital Structure
ABT’s funded debt consists of two secured term loan facilities agented by SWK Funding LLC and several unsecured loans from two of its shareholders, Intersouth Partners VII, L.P. and Mr. Ronald Nutt.
Its original First Lien Lenders provided ABT with a senior secured term loan facility of up to $4 million. They assigned the credit agreement to SWK, as agent and lender, in 2016, and it has been amended several times since to address defaults. Today, the aggregate principal outstanding is approximately $9,683,333, including $2,350,000 in amounts that were advanced this year. ABT proposes to “roll up” this debt as part of a post-petition financing facility.
SWK as agent, and certain lenders, entered into a Second Lien Credit Agreement with ABT in an amount up to $10 million. Today, the aggregate principal outstanding under the Second Lien Term Loan is approximately $16,161,455.
ABT also entered into several subordinated unsecured promissory notes with Intersouth totaling $1,136,000. And ABT and Mr. Ronald Nutt entered into two subordinated unsecured promissory notes totaling approximately $1.8 million.
But that’s not all. ABT also owes roughly $180,000 to some 65 trade vendors.
Customary “First-Day” Motions
To support its transition to bankruptcy, ABT has filed customary first-day motions, including motions to:
- Continue its cash management system;
- Pay employee wages, insurance premiums, and taxes;
- Provide deposits to utlility companies;
- Limit stock trades; and
- Pay critical vendors
The case number is 18-11398 (LSS). The case has been assigned to Judge Laurie Selber Silverstein and is pending in the Delaware Bankruptcy Court. Garden City Group is acting as claims and noticing agent. Additional information is available in the company’s “first-day” global declaration, available here.