Hamilton Beach Brands, a US seller of home appliances from air fryers to clothes irons, is set to buy Irish medical technology company HealthBeacon for €6.9 million in a rescue deal that will see senior creditors made whole and unsecured creditors recover more than had been expected.
The survival plan, or so-called scheme of arrangement, has been drawn up by insolvency practitioner Shane McCarthy of KPMG, who was appointed as examiner to HealthBeacon in October because the company had company had run out of cash.
The Irish Times reported last month that Virginia-based Hamilton Beach, which had an existing partnership with HealthBeacon and committed to funding the cash-strapped company through the examinership process, had pitched the highest offer among three short-listed bidders for the business.
HealthBeacon’s flagship product is a smart sharps bin – about the size of a standard toaster – and an app for use by patients who inject medication at home.
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The scheme, which creditors will vote on next week, will see unsecured creditors, owed €3.13 million, recoup 55 per cent of what they are owed. That is much higher than the 19 per cent recovery rate predicted in an independent expert’s report submitted to the High Court at the time of the examinership petition.
Unsecured creditors include Romanian tech group Assist Software SRL, which is owed €471,915, and the UK unit Teva Pharmaceuticals, which has a claim of €72,312. Goodbody Stockbrokers, law firms A&L Goodbody and Philip Lee and accountancy firm PwC are also among smaller such creditors, owed between €15,000 and €72,300.
HealthBeacon’s key supplier creditor, Wexford-based tech company Taoglas, whose technology is used in the digital sharps bins, has secured retention of title on almost €2 million of stock under the rescue plan. It will also receive 55 cents on the euro for a further €604,828 of unsecured claims.
Hamilton Beach committed €1.85 million of funding to HealthBeacon to get it through the examinership process in a deal that positioned the US company as a secured creditor. Adding in interest and a €300,000 fee tied to the facility, it is owed €2.17 million, which is being made whole.
Preferential creditors, including the Revenue Commissioners, and certain claims from employees will also recover 100 per cent. They are owed a combined €342,547.
Investors pumped almost €50 million into the company since it was set up, including €25 million raised in a peak-of-the-market initial public offering in December 2021. Its market value had collapsed to just €1.18 million by the time share-trading was suspended in mid-October as investor confidence evaporated following a sales warning, which led to the ousting of co-founder Jim Joyce as chief executive.
While HealthBeacon had been making progress with the rollout of its technology across key distribution channels, including through US specialty pharmacy groups, it was running way behind its plan on implementing the deals, due to their complexity. This meant the company burned through cash as it struggled to meet earnings targets.
HealthBeacon entered a partnership in 2021 with Hamilton Beach to sell its product directly to consumers through the US home appliances group. The deal was an important one for the US company, too, as it marked a diversification into the medical devices market.
The Irish company widened its partnership with Hamilton Beach early last year to also include management of its supply chain in the US as it sought to rein in costs.
The rescue deal will see HealthBeacon’s existing shares being cancelled and the company delisting from the Irish stock market.
A liquidation of the company would have led to preferential and unsecured creditors recouping nothing of what they were owed, according to the scheme of arrangement.
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