Implant Sciences has announced that it has entered into an asset purchase agreement to sell the explosives trace detection (ETD) assets to L-3Communications for $117.5 million in cash, plus the assumption of specified liabilities. Following the proposed acquisition, the assets will be integrated into L-3’s Security & Detection Systems division within its Electronic Systems segment.
Pursuant to the terms of the agreement, L-3 will acquire the worldwide rights to the QS-B220 desktop and the QS-H150 handheld ETD systems as well as all other product and technology assets of Implant Sciences. Over 5,000 of IMSC’s non-radioactive ion mobility spectrometry systems have been deployed in more than 70 nations for aviation security, infrastructure protection, mass transit security, military operations, VIP protection, and corporate security.
The company’s ETD systems have received approvals and certifications from several international regulatory agencies including the US Transportation Security Administration (TSA), the European Civil Aviation Commission (ECAC) and the Ministry of Public Safety in China. In September 2016, the TSA placed a delivery order for an additional 1,353 of the QS-B220 systems and related supplies.
"Implant Sciences’ innovative technology has resulted in the development and deployment of leading-edge Explosives Trace Detectors. Our pioneering efforts in the use of non-radioactive ionization methods provide a flexible and expandable technology platform and have enabled our products to rapidly penetrate the aviation security market and truly become a market leader," stated Dr. William McGann, Implant Sciences’ CEO. "We are excited about the opportunity to participate in L-3’s growth vision with our technology, products, and solutions."
The asset purchase agreement constitutes L-3 as the lead bidder in a sale process being conducted under Section 363 of the U.S. Bankruptcy Code. As the bidder, L-3 will be entitled to a break-up fee and expense reimbursement in certain circumstances, including if it does not prevail as the successful bidder at any subsequent auction. L-3’s role as the lead bidder, and the sale itself, are subject to approval by the Bankruptcy Court.
In connection with the sale, IMSC and its subsidiaries today filed voluntary petitions under Chapter 11 of the US Bankruptcy Code in the Bankruptcy Court for the District of Delaware. IMSC intends to seek and obtain customary relief from the bankruptcy court to permit it to continue to operate its business in the ordinary course without interruption during the sale period. In addition, IMSC has obtained commitments for debtor-in-possession financing of approximately $5.7 million, which is subject to approval of the court.
The company intends to use the cash from the sale of the ETD asset to pay its creditors and continue on with the strategic plan as previously communicated to its shareholders.