Shares of Endologix, Inc. ELGX, a manufacturer of medical devices for the treatment of aortic disorder, are moving to the downside Monday.
What Happened: Irvine, California-based Endologix said it has initiated a voluntary Chapter 11 filing after undergoing a strategic review. The company also said it has simultaneously filed a consensual plan of reorganization supported by Deerfield Partners, its largest creditor.
The plan provides for Endologix being taken private by Deerfield, with the company expecting to emerge financially well-equipped to realize the full potential of what it said is the most advanced and innovative abdominal aortic aneurysm pipeline in the industry.
The plan would also help the company eliminate about $180 million in debt from its balance sheet on a net basis, including the $130 million owed to Deerfield , which would be converted to equity in the reorganized company. It would also gain access to new financing to the tune of $110.8 million.
Why It Matters: The COVID-19 pandemic has hurt both the top- and bottom-line of companies, leaving some in a cash crunch.
Endologix said it believes the actions announced Monday will help it address financial challenges resulting from COVID-19 and the related delays in elective medical procedures.
"The path we are now taking to strengthen our balance sheet and transition to private ownership will allow us to accelerate our progress with our strong patient-first business focus, an enduring spirit of innovation, and an unrelenting commitment to advancing our life-saving products supported by industry-leading evidence," CEO John Onopchenko said in a statement.
What's Next: Endologix said it expects to finalize the process and emerge as a private company by the third quarter of 2020. The company said it fully intends to operate its business as usual during the process.
ELGX Price Action: The stock was plunging 65.34% to 27 cents at the time of publication Monday.
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