Deltex Medical Group PLC Subscription and extension of Debt Facility (9475A)

TIDMDEMG

RNS Number : 9475A

Deltex Medical Group PLC

08 February 2022

08 February 2022

Deltex Medical Group plc

Subscription to raise approximately GBP1.4 million and extension of Standby Debt Facility

Deltex Medical Group plc (the "Group", the "Company" or "Deltex Medical") (AIM: DEMG), the global leader in oesophageal Doppler monitoring, today announces:

i) subscription for 111,720,000 new Deltex Medical ordinary shares (the "Subscription Shares") at a price of 1.25 pence per share (the "Issue Price") (the "Subscription")

   ii)    extension of the Standby Debt Facility previously announced on 20 September 2021 

Subscription

The Board has concluded that it is now appropriate to raise a total of approximately GBP1.4 million by way of subscription for 111,720,000 Subscription Shares at a price of 1.25 pence per Deltex Medical ordinary share ("Share"). This represents a 9% discount to the closing mid-market Share price on 07 February 2022.

Certain directors of the Company, namely Nigel Keen, Julian Cazalet, Mark Wippell, Natalie Wettler and Andy Mears, intend to participate in the Subscription for, in aggregate, 32,610,400 new Shares at the Issue Price.

 
 Director /         Current        Pre-transaction   Subscription   Post transaction   Post transaction 
  PDMR               Shares held    shareholding      Shares         holding            % 
 Nigel Keen           79,852,821            13.60%     20,000,000         99,852,821             14.28% 
                   -------------  ----------------  -------------  -----------------  ----------------- 
 Julian Cazalet       17,153,971             2.92%     10,000,000         27,153,971              3.88% 
                   -------------  ----------------  -------------  -----------------  ----------------- 
 Mark Wippell         10,237,875             1.74%        800,000         11,037,875              1.58% 
                   -------------  ----------------  -------------  -----------------  ----------------- 
 Andy Mears            5,858,731             1.00%        800,000          6,658,731              0.95% 
                   -------------  ----------------  -------------  -----------------  ----------------- 
 Natalie Wettler               -                 -      1,010,400          1,010,400              0.14% 
                   -------------  ----------------  -------------  -----------------  ----------------- 
 

The participation of each of Nigel Keen, Julian Cazalet, Mark Wippell, Natalie Wettler and Andy Mears in the Subscription constitutes a related party transaction under Rule 13 of the AIM Rules for Companies. The independent directors, being Christopher Jones and Tim Irish, having consulted with the Company's nominated adviser, consider that the terms of the transaction are fair and reasonable insofar as Deltex Medical's shareholders are concerned.

Admission of the Subscription Shares to trading on AIM ("Admission") is expected to take place on or around 14 February 2022.

Reasons for the Subscription and use of proceeds

The proceeds from the Subscription will be used: (i) to launch, market and commercialise the next generation TrueVue monitor as well as a new non-invasive Doppler probe; (ii) to provide the financial resources required to support the substantial grant funding already won by the Group to enhance and advance its haemodynamic monitoring technology; and (iii) for the general working capital needs of the business.

The next generation TrueVue haemodynamic monitor replaces the current version which was launched in 2012. This next generation monitor will utilise modern electronics, benefits from a significantly improved user interface, incorporates battery power, is light-weight and highly portable, enabling it to be used in any area within the hospital. The Board believes that these new and improved features should significantly increase the addressable market for the Group's technology.

In addition to the next generation TrueVue monitor, the Group has also developed a new non-invasive Doppler device that can be used on awake patients. The development of this technology draws upon the substantial body of published research relating to the Group's minimally-invasive haemodynamic monitoring device which is already in use in surgery as well as intensive care units around the world.

The new non-invasive device has been designed and is intended to be sold into a broad range of hospital departments where the Group is not currently present, including: Accident & Emergency; pre-surgical assessment; obstetrics; cardiology and general medical wards.

The Group believes that this new technology, used in conjunction with the appropriate treatment protocols, will improve patient outcomes, reduce hospital stays, help increase the efficiency of healthcare workers and deliver significant savings to health systems. It should also help facilitate the rapid diagnosis of serious illness in COVID-19 patients and also enable rapid identification of patients with sepsis.

On 20 December 2021, Deltex Medical disclosed a successful application for the UK Smart Award by Innovate UK (GBP0.5 million gross). This Innovate UK Smart Award relates to the development of the innovative, hand-held, non-invasive Doppler device (described above) for improved haemodynamic management of hospitalised patients. During 2021, the Group was also awarded two other grants by Innovate UK (GBP0.1 million gross in aggregate) including one to help with the development of its new, real-time, easy-to-use, non-invasive haemodynamic monitoring technology working collaboratively with the UK's National Physics Laboratory.

Financial update and future prospects

As previously disclosed in the pre-close announcement of 11 January 2022, Group revenues for the year ended 31 December 2021 were GBP2.3 million (2020: GBP2.4 million). 2021 revenues continued to be adversely affected by the impact of COVID-19 and the resulting significant reduction in elective surgical procedures globally. Deltex Medical's business experienced disruptions associated with the pandemic for the entire year unlike trading in 2020 when the business in the first quarter was not so severely affected. Although the Group's direct business in the USA and the UK has not yet returned to pre-pandemic levels, the performance of the International division significantly improved during the year.

On 26 January 2022 the Group announced a US$0.2 million contract win from one of its distributors in the Americas for the purchase of the current generation TrueVue monitor. This contract award also provides for on-going contracted monthly revenues for single-use Deltex probes, which are used with these devices.

The backlog in elective surgical cases continues to build around the world and this is increasingly becoming a political issue in many territories. The Board continues to believe that this backlog represents a key opportunity as the Group's TrueVue Doppler technology can be used to help minimise patient length of stay, and associated costs, following elective surgery and hence increase capacity for hospitals.

Principal risks and uncertainties

A description of the principal risks and uncertainties associated with the Group and its activities is set out on pages 20 and 21 of Deltex Medical's Annual Report and Accounts for the financial year ended 31 December 2020. The Board believes that the description of these principal risks and uncertainties remains relevant and applicable to the Group at the date of this Announcement.

Extension of Standby Debt Facility

On the 20 September 2021 the Board announced that it had entered into an agreement with Imperialise Limited, a company controlled by Nigel Keen, Chairman of Deltex Medical, for a GBP0.5 million standby loan facility (on arm's length commercial terms) until 31 December, 2022. During the period of the loan, the Group could draw down on the facility as and when required.

Imperialise Limited has agreed to extend this debt facility for an additional year. The facility is repayable in full on or before 31 December 2023.

The interest rate remains unchanged on the facility at 8% per annum, and it is unsecured.

Nigel Keen is a director of both Imperialise Limited and Deltex Medical, and accordingly, this transaction constitutes a related party transaction under Rule 13 of the AIM Rules for Companies. The independent directors, being Andy Mears, Natalie Wettler, Julian Cazalet, Mark Wippell, Christopher Jones and Tim Irish, having consulted with the Company's nominated adviser, consider that the terms of the transaction are fair and

reasonable insofar   as Deltex Medical's shareholders are concerned. 

Commenting on the Subscription, Nigel Keen, Chairman of Deltex Medical said:

"This fund raising enables Deltex Medical to develop and launch the next generation of its technology, including the new non-invasive TrueVue Doppler with significantly broader applications throughout hospitals."

"We believe that Deltex Medical will benefit this year from a combination of the world learning to live with COVID-19 and pressure continuing to build on health systems to reduce the substantial backlog of elective surgical procedures."

"The Group's next generation monitor and new, novel non-invasive haemodynamic monitoring technology should help position Deltex Medical to build market share as the backlog in elective surgery is tackled around the world."

For further information, please contact:

 
 Deltex Medical Group plc                   01243 774 837 
 Nigel Keen, Chairman                        [e-mail] 
 Andy Mears, Chief Executive 
 Natalie Wettler, Group Finance Director 
 
 Nominated Adviser and Broker 
  Arden Partners plc                        0207 614 5900 
 Paul Shackleton                             [e-mail] 
 Benjamin Onyeama-Christie 
 
   Joint Broker 
 Turner Pope Investments (TPI) Ltd          0203 657 0050 
 Andy Thacker                                [e-mail] 
  James Pope 
 

Notes for Editors

Deltex Medical manufactures and markets haemodynamic monitoring technologies which are primarily used in critical care and general surgical procedures. Deltex Medical's proprietary oesophageal Doppler monitoring (TrueVue Doppler) measures blood flow velocity in the central circulation in real time. The technology generates a low-frequency ultrasound signal which is highly sensitive to changes in blood flow and measures such changes in 'real time'. Deltex Medical is the only company in the enhanced haemodynamic monitoring space to have built a robust and credible evidence base demonstrating both the clinical and economic benefits of its core technology: TrueVue Doppler. This technology has been proven in a wide range of clinical trials to reduce complications suffered by patients after surgery and consequently can save hospitals money.

Clinicians would like to be able to monitor the haemodynamic status of awake patients not only in the operating room and intensive care departments. Our R&D programmes will provide the capability for Deltex Medical devices to be used in A&E, including, for example, for the rapid detection of sepsis, as well as on lower acuity wards or outside the hospital setting.

Deltex Medical is designing the next generation of non-invasive Doppler ultrasound devices that will be released onto the TrueVue platform and will accurately measure a non-sedated patient's haemodynamic status anywhere within the hospital and not just for elective surgical patients.

Group goal

Haemodynamic management is now becoming widely accepted as a vital part of the anaesthesia protocols for surgical patients, as well as treating ventilated intensive care patients, including ventilated COVID-19 patients. There is also a desire to start measuring haemodynamics on awake patients outside of the operating room or intensive care departments, such as in lower acuity units or in A&E. Our R&D programmes are targeting these broader applications. Consequently, the Group's focus is on maximising value from the opportunities associated with: the COVID-19 pandemic; the elective surgery backlog; the risks associated with sepsis; awake patients and the higher profile of haemodynamic monitoring which has arisen from recent consolidation in the sector.

The Group aims to provide clinicians with a modern, next generation, single 'haemodynamic workstation' platform which offers them a range of technologies from simple to sophisticated to be deployed according to the patient's clinical condition as well as the skill and expertise of the user. Doing this will enable the Group to partner with healthcare providers to support modern haemodynamic management across the whole hospital.

The Group is currently in the implementation phase of achieving this goal in a number of territories worldwide, operating directly in the UK and the USA, and via agreements with approximately 40 distributors overseas.

Notification of transactions by Directors, Persons Discharging Managerial Responsibilities ("PDMRs") and persons closely associated with them.

 
 1.   Details of the person discharging managerial responsibilities 
       / person closely associated 
 a)   Name                                     a) Nigel Keen 
                                                b) Julian Cazalet 
                                                c) Mark Wippell 
                                                d) Andy Mears 
                                                e) Natalie Wettler 
     ----------------------------------  ------------------------------------ 
 2.   Reason for the Notification 
     ------------------------------------------------------------------------ 
 a)   Position/status                          a) Non-Executive Director 
                                                b) Non-Executive Director 
                                                c) Non-Executive Director 
                                                d) CEO 
                                                e) Finance Director 
     ----------------------------------  ------------------------------------ 
 b)   Initial notification/amendment      Initial notification 
     ----------------------------------  ------------------------------------ 
 3.   Details of the issuer, emission allowance market participant, 
       auction platform, auctioneer or auction monitor 
     ------------------------------------------------------------------------ 
 a)   Name                                Deltex Medical Group plc 
     ----------------------------------  ------------------------------------ 
 b)   LEI                                 213800XN34P6LI8J6M39 
     ----------------------------------  ------------------------------------ 
 4.   Details of the transaction(s):section to be repeated for (i) 
       each type of instrument; (ii) each type of transaction; (iii) 
       each date; and (iv)each place where transactions have been conducted 
     ------------------------------------------------------------------------ 
 a)   Description of the Financial        Ordinary Shares of 1 p each 
       instrument, type of 
       instrument 
     ----------------------------------  ------------------------------------ 
      Identification code                 GB0059337583 
     ----------------------------------  ------------------------------------ 
 b)   Nature of the Transaction           Subscription for new shares 
     ----------------------------------  ------------------------------------ 
 c)   Price(s) and volume(s)               Price(s)         Volume(s) 
                                                 a) 1.25p    20,000,000 
                                                            ----------- 
                                                 b) 1.25p    10,000,000 
                                                            ----------- 
                                                 c) 1.25p    800,000 
                                                            ----------- 
                                                 d) 1.25p    800,000 
                                                            ----------- 
                                                 e) 1.25p    1,010,400 
                                                            ----------- 
     ----------------------------------  ------------------------------------ 
 d)   Aggregated information              n/a - single transaction 
     ----------------------------------  ------------------------------------ 
 e)   Date of the transaction             08 February 2022 
     ----------------------------------  ------------------------------------ 
 f)   Place of the transaction            London Stock Exchange, AIM Market 
                                           (XLON) 
     ----------------------------------  ------------------------------------ 
 

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February 08, 2022 01:59 ET (06:59 GMT)