| MDS Announces Strategic Repositioning |
The Company also announced that it intends to sell its MDS Pharma Services business, a leading provider of innovative drug discovery and early-stage development solutions for pharmaceutical and biotechnology companies. Upon completion of these transactions, the Company would be focused solely on its MDS Nordion business, which is a leading provider of medical isotopes for molecular and diagnostic imaging, radiotherapeutics and sterilization technologies. These decisions follow a comprehensive strategic review by a Special Committee of independent Directors working with Management and financial and legal advisors. The "The Board and Executive Management Team believe the proposed path forward provides the greatest opportunity to unlock the value of MDS businesses in the near-term and enables a substantial return of proceeds from the sale of the MDS Analytical Technologies business to shareholders," said Goldman, Sachs Co. has provided an opinion to the Board of Directors of "The economic downturn and the prolonged shutdown of MDS Analytical Technologies Under the terms of the agreement, When completed, these transactions will create a fully integrated, industry-leading, global mass-spectrometry business. In combination with MDS Analytical Technologies' Drug Discovery and Bioresearch product lines, this newly integrated business will serve customers with an award-winning product line. MDS is committed to working with To approve the sale of MDS Analytical Technologies, a Special Meeting of Shareholders is expected to be held in MDS anticipates that a management proxy circular for the shareholder meeting will be mailed to shareholders later this month and will be available at www.sedar.com, www.sec.gov/edgar.shtml and www.mdsinc.com. The transaction is expected to close in the fourth calendar quarter of 2009. Proceeds from the Sale Upon completion of the sale of the MDS Analytical Technologies business, MDS currently intends to return approximately MDS also expects to use a portion of the proceeds, together with existing cash on hand, to retire all outstanding senior unsecured notes, pay transaction and restructuring costs and fund ongoing operations of the remaining business. MDS Pharma Services MDS also announced that it is actively seeking a buyer for its MDS Pharma Services business, which is focused on Early Stage operations (Discovery through Phase IIa). MDS Pharma Services is a leader in molecular screening and profiling, has strength in bioequivalence and bioanalysis studies, and has one of the largest Phase I bed capacities in the industry. A sale of the MDS Pharma Services business is expected to provide opportunities to build market leadership and to position the business to better serve global customers in an increasingly competitive contract research market. As previously announced on Subsequent to the completion of a sale of the MDS Pharma Services business, the Company anticipates it would distribute a portion of the sale proceeds to shareholders. There can be no assurance that MDS will complete a transaction involving MDS Pharma Services. If MDS determines that there is not an acceptable transaction for MDS Pharma Services, it intends to retain and invest in building the business. MDS Nordion As a stand-alone business, MDS Nordion will continue to focus on building its core strengths and leadership position in providing medical isotopes for molecular imaging, radiotherapeutics and sterilization technologies. Despite the current shutdown of AECL's NRU reactor, MDS Nordion continues to deliver positive adjusted EBITDA and cash flow from sterilization technologies and radiopharmaceuticals. MDS Nordion's goal is to remain an innovative market leader delivering strong financial performance. Assuming completion of the sale of MDS Analytical Technologies and MDS Pharma Services, MDS will remain as a publicly traded entity consisting solely of the MDS Nordion business. The Company will continue to review its operational requirements and intends to take appropriate action to reflect the scope and complexity of MDS following the completion of these transactions. In the third quarter, For the third quarter of 2009, MDS expects to report net revenues in the range of MDS also expects to report third quarter 2009 cash flow in the range of The strategic repositioning actions announced today will be treated as a subsequent event for financial reporting purposes in the third quarter of 2009. Conference Call MDS will hold a conference call today at Advisors In connection with the transaction, Goldman, Sachs Co., and Sale Agreement The full text of the Sale Agreement for the sale of the MDS Analytical Technologies business will be available shortly at www.sedar.com and www.sec.gov/edgar.shtml. Transaction Conditions The transaction is subject to various conditions to closing, including the affirmative vote of at least 66 2/3% of the shareholders casting votes on the transaction, regulatory approvals, the concurrent closing of the Life transaction and other customary closing conditions. In addition, the Company has the right to terminate the Sale Agreement if, among other things, holders of more than 15% of the Company's outstanding common shares have validly exercised their dissent rights in respect of the sale. The Board of Directors of MDS has agreed that it will not solicit or initiate discussions or negotiations with any third party concerning any business combination or other material transactions involving About About Caution Concerning Forward-Looking Statements This document contains forward-looking statements, including statements with respect to the proposed sale of the MDS Analytical Technologies business, the proposed use of proceeds from the sale, the strategy of the remaining business and the Company's intention to sell other assets of the Company. Some forward-looking statements may be identified by words like "expects", "anticipates", "plans", "intends", "indicates" or similar expressions. The statements are not a guarantee of future performance, and are inherently subject to risks and uncertainties. MDS's actual results could differ materially from those expressed in the forward-looking statements due to these risks and a number of other factors, including, but not limited to, successful implementation of structural changes, including restructuring plans, acquisitions and divestitures including the proposed sale of the MDS Analytical Technologies business, technical or manufacturing or distribution issues, the competitive environment for MDS's products and services, the degree of market penetration of its products and services, the ability to secure a reliable supply of raw materials, the impact of our clients' exercising rights to delay or cancel certain contracts, the strength of the global economy, the stability of global equity markets, the availability and cost of financing, the impact of the movement of the U.S. dollar relative to other currencies, particularly the Canadian dollar and the euro, uncertainties associated with critical accounting assumptions and estimates, and other factors set forth in reports and other documents filed by MDS with Canadian and U.S. securities regulatory authorities from time to time, including MDS's quarterly and annual MD A, Annual Information Form, and Annual Report on Form 40-F for the fiscal year ended Use of Non-GAAP Financial Measures Non-GAAP measures, including terms such as net revenue, adjusted EBITDA, adjusted EPS, new orders and backlog, are used to explain the operating performance of the Company. These terms are not defined by GAAP, and MDS's use may vary from that of other companies. MDS uses certain non-GAAP measures so that investors and analysts have a better understanding of the significant events and transactions that have had an impact on results, or may have an impact on MDS's financial outlook. MDS provides a description of these non-GAAP measures and a reconciliation of these non-GAAP measures for actual results to GAAP financial results in its MD A and Annual Report. SOURCE MEDIA: Janet Ko, (905) 267-4226, janet.ko@mdsinc.com; INVESTORS: Kim Lee, (905) 267-4230, kim.lee@mdsinc.com |