Greatbatch proposes Algostim subsidiary spin-off

Frisco, Texas – Greatbatch Inc. officials announced a proposed tax-free spin-off of Algostim LLC., a subsidiary of Greatbatch's QiG Group established in 2008 to design and develop a broad-based neurostimulation platform. Algostim's Algovita Spinal Cord Stimulation (SCS) system is the first application of the platform, with additional QiG applications currently in development.

The spin-off would create a new publicly traded company focused on commercializing the Algovita Spinal Cord Stimulation system to treat chronic intractable pain of the trunk and/or limbs, with Greatbatch continuing to focus on expanding its core business and providing complete medical device systems for its customers.

The Algovita system incorporates an extensive array of Greatbatch intellectual property, advanced technology and innovative programming features. The system received CE mark from the designated European Notified Body, TÜV SÜD America in June 2014 and an application has been submitted for Pre-Market Approval (PMA) with the U.S. Food and Drug Administration (FDA). Greatbatch has been informed by the FDA that it has determined that the PMA application is approvable subject to an FDA inspection that finds the manufacturing facilities, methods and controls in compliance with the applicable requirements of the Quality System regulation. Greatbatch would continue to manufacture the Algovita Spinal Cord Stimulation system under a long term supply agreement with the new public company.

"Over the past nine years, Greatbatch has undertaken a strategic evolution from strictly developing components and subassemblies to also developing complete active implantable medical device (AIMD) systems for our customers," said Thomas J. Hook, president and CEO of Greatbatch, Inc. "Spinning-off Algostim would provide both entities the focus and flexibility needed to execute their growth initiatives, their strategic imperatives and provide their respective customers with unparalleled service. The end result would further advance the global medical device market and enhance shareholder value."

Greatbatch's Board of Directors believes that spinning off Algostim would allow each company to better allocate resources to meet the needs of their respective businesses, pursue distinct capital allocation strategies, focus on different growth opportunities and provide a clearer investment proposition to attract long-term investors best suited to each company.

The proposed spin-off is consistent with Greatbatch's strategy to combine its design, development and manufacturing abilities with the sales and distribution strength of a commercialization partner for QiG's complete medical device systems.

After the spin-off Greatbatch would continue to capitalize on its considerable and growing intellectual property holdings to design, develop and manufacture discrete technologies and complete medical device systems in the cardiac, neurostimulation, vascular, orthopaedic, portable medical and energy markets it serves. Combining its intellectual property standing with the customer relationships and engineering services of CCC Medical Devices and NeuroNexus further position Greatbatch as a leading developer and manufacturer in the neurostimulation market.

The spin-off is expected to be completed by the end of 2015, but remains subject to final approval of the Greatbatch Board of Directors, confirmation of the tax-free nature of the transaction, and the effectiveness of a Form 10 registration statement to be filed with the U.S. Securities and Exchange Commission, among other conditions. Greatbatch has retained Piper Jaffray & Co. as its financial advisor and Hodgson Russ LLP as its legal counsel.

Source: Greatbatch Inc.