180 Degree Capital Corp. Life Science Portfolio Company Enters Into Definitive Agreement to be Acquired

Rhea-AI Summary

180 Degree Capital Corp. (NASDAQ: TURN) has announced a definitive agreement for the acquisition of one of its privately held life science portfolio companies. The deal is expected to close in mid-to-late May 2020, with 180 set to receive approximately $4.4 million in cash and an additional $400,000 held in escrow for one year. Future payments could total up to $81 million, dependent on undisclosed milestones, with the first expected in 2-3 years. The transaction is viewed as significant for TURN and its shareholders, with potential for a 4x to 5x increase in the company's value in Q2 2020.

Positive

• Expected cash proceeds of approximately $4.4 million upon closing of the acquisition.
• Potential future payments of up to $81 million related to milestone achievements.
• CEO indicates a projected 4x to 5x increase in value for the company in Q2 2020.

Negative

• The timing and achievement of future milestone payments are highly uncertain.
• Current fair value of the portfolio company is only $2.2 million as of March 31, 2020.

MONTCLAIR, N.J., May 05, 2020 (GLOBE NEWSWIRE) -- 180 Degree Capital Corp. (NASDAQ:TURN) (“180”) announced today that one of its privately held life science portfolio companies has entered into a definitive agreement to be acquired by an undisclosed party. The transaction is currently expected to close in mid-to-late May 2020.

The terms of the acquisition are confidential. 180 notes, however, that upon closing, it will receive approximately $4.4 million in cash for its position in the company. Approximately $400,000 in additional proceeds will be held in escrow for one year. 180 will also be eligible to receive up to approximately $81 million in potential future payments upon the achievement of undisclosed development and commercial milestones. 180 currently estimates that the first milestone payment could occur in 2-3 years, and subsequent milestone payments could occur at various points over the subsequent 10-15 years. The timing and likelihood of the acquirer achieving these milestones is highly uncertain and if these milestones are achieved, the timing may be materially different than current estimates. These factors will be used to develop a fair market value based on a probability-weighted net present value analysis of the potential future milestone payments as of 180's next valuation date, which is June 30, 2020. In addition, simultaneous with the close of the transaction, the company will spin out certain assets into a new entity. 180 will own shares of this new entity. 180’s securities of this privately held life science portfolio company were fair valued as of March 31, 2020, at approximately $2.2 million.

“The closing of the sale of this privately held life science portfolio company will be a very meaningful event for TURN and its shareholders,” said Kevin M. Rendino, Chief Executive Officer of 180. “As long as the transaction closes as expected, we currently expect a 4x to 5x increase to the value of this company in Q2 2020. We congratulate the management team of this company for their hard work and dedication that led to this positive outcome for all of its shareholders, including 180.”

About 180 Degree Capital Corp.

180 Degree Capital Corp. is a publicly traded registered closed-end fund focused on investing in and providing value-added assistance through constructive activism to what we believe are substantially undervalued small, publicly traded companies that have potential for significant turnarounds. Our goal is that the result of our constructive activism leads to a reversal in direction for the share price of these investee companies, i.e., a 180-degree turn. Detailed information about 180 and its holdings can be found on its website at www.180degreecapital.com.

Press Contact:
Daniel B. Wolfe
180 Degree Capital Corp.
973-746-4500

Forward-Looking Statements

This press release may contain statements of a forward-looking nature relating to future events. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect 180's current beliefs, and a number of important factors could cause actual results to differ materially from those expressed in this press release. Please see 180's securities filings filed with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties associated with 180's business and other significant factors that could affect 180's actual results. Except as otherwise required by Federal securities laws, 180 undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. The reference and link to the website www.180degreecapital.com has been provided as a convenience, and the information contained on such website is not incorporated by reference into this press release. 180 is not responsible for the contents of third-party websites.

FAQ

What is the acquisition agreement related to TURN?

180 Degree Capital Corp. announced that a privately held life science portfolio company will be acquired, with expected cash proceeds of approximately $4.4 million.

When is the acquisition of the life science company expected to close?

The acquisition is anticipated to close in mid-to-late May 2020.

What are the potential future payments from the acquisition for TURN?

180 Degree Capital Corp. could receive up to approximately $81 million in future payments based on undisclosed development milestones.

What is the estimated increase in value for TURN after the acquisition?

180 expects a 4x to 5x increase in value in Q2 2020 following the acquisition.

What is the current fair value of the acquired portfolio company?

As of March 31, 2020, the fair value of the portfolio company is approximately $2.2 million.