Fresh off the press
YOUNGSVILLE, LA / ACCESSWIRE / March 24, 2016 / RedHawk Holdings Corp. (IDNG) ("RedHawk" or the "Company") announced today that it has signed a definitive agreement (the "Purchase Agreement") with, amongst others, Scarlett Pharma Ltd ("Scarlett") through its wholly-owned subsidiary RedHawk Pharma UK LTD to complete the previously announced acquisition of a 25% ownership investment in EcoGen Europe LTD ("EcoGen"), a United Kingdom company specializing in the manufacturing and the marketing of certain branded generic pharmaceuticals and medical devices. Scarlett, a United Kingdom company, will initially retain a 75% ownership position in EcoGen.
In exchange for the 25% stake in EcoGen, the Company will issue to Scarlett up to 100 million restricted shares of the common stock of the Company. Under the terms of the Purchase Agreement, 10 million shares were issued to Scarlett at closing with up to an additional 90 million shares (the "Earnout Shares") to be issued and vested pro rata as EcoGen reports audited EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). The issuance and vesting of the Earnout Shares will occur annually based upon audited results of EcoGen and will conclude on the earlier of EcoGen attaining cumulative EBITDA of $100 million or seven years from the closing date.
Additionally, during the seven-year period commencing on the closing date, the Company has the right, but not the obligation, to increase its ownership position in EcoGen up to a maximum of 49% of the entire capital of Ecogen. Should the Company exercise its option to increase its ownership position, the Company will issue to Scarlett, pro rata, up to an additional 100 million restricted shares of the common stock of the Company.
Concurrent with the execution of the Purchase Agreement, the Company entered into a Consultancy Agreement with Scarlett for the marketing and distribution in the United Kingdom and, where available, other European countries, certain products offered by RedHawk Medical Products UK LTD, including, but not necessarily limited to, WoundClot™ and the Disintegrator™ Insulin Needle Destruction Unit.
EcoGen also holds distribution rights in a number of European countries for Zonis®, a patented antimicrobial ionic silver calcium catheter dressing with both wound healing and haemostatic properties. It is designed to be placed directly over the exit site of all vascular and non-vascular percutaneous medical devices. Zonis® reduces bacteria colonization and related bloodstream infections by delivering ionic silver directly to the site.
The Company said it will use a portion of the shares previously returned to treasury in February 2016 to fund the 10 million shares issued to Scarlett at closing. The Company also said it expects EcoGen revenues from the sale of certain branded generic pharmaceutical drugs and medical devices will commence immediately. Further, the Company said Scarlett has initiated the marketing of WoundClot Advanced Bleeding Control ("WoundClot") pursuant to the previously announced exclusive distribution agreement between RedHawk Medical Products UK LTD and Core Scientific Creations Ltd., and revenues from the sale of WoundClot are also expected to commence during the three-month period ending on June 30, 2016.
Commenting on the completion of the EcoGen investment, Daniel J. Schreiber, Chairman and Chief Executive Officer of the Company, said, "RedHawk's investment in EcoGen and our affiliation with Scarlett is a major milestone in the development of our medical products business unit. Not only have we added branded generic pharmaceuticals to the list of products being offered by our medical products unit, closing of this transaction aligns us with a highly respected marketing and management pharmaceutical and medical device team, allowing us to immediately develop and expand our medical products unit. While our initial marketing efforts are focused on the European countries, our affiliation with EcoGen and Scarlett now allows us to not only consider offering other medical devices and pharmaceutical products in the United Kingdom, but it also permits us to consider possible avenues of entry into the United States' medical device and pharmaceutical markets."
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