Kirschner to form alliance with Ohio firm

December 08, 1992|By Liz Bowie | Liz Bowie,Staff Writer

Kirschner Medical Corp. said yesterday that it will form a strategic alliance with Figgie International Inc. in a deal that will pump $7.4 million into Kirschner.

Figgie, a Cleveland-based diversified manufacturer, will purchase 619,300 new common shares for $12 a share, representing a 20 percent stake, in the Timonium-based maker of orthopedic products. Kirschner closed yesterday at $9.50, up $1.50 a share.

Yesterday's announcement was the third time in the past year that Kirschner has announced a proposed corporate alliance.

The company, which analysts say has good products and

revenues but is hurt by a high level of debt, had agreed to be sold to Henley International. Sutter Corp., a subsidiary of Fort Worth, Texas-based Columbia Hospital Corp., had also agreed to merge with Kirschner. Both those negotiations broke off.

But Kirschner officials said yesterday that they expected the Figgie deal to be completed and the stock to be purchased by the end of the week.

OC "It is a substantial infusion of cash which leaves Kirschner in

charge of its own destiny," said Lewis Parker, the company's chief financial officer.

The money would be used to make an accelerated payment to Maryland National Bank, to upgrade manufacturing equipment at its Fair Lawn, N.J., plant and to accelerate the development of a modular replacement shoulder and some products in its knee product line.

The development of those products had been delayed because the company lacked working capital, Mr. Parker said.

Kirschner, which lost $421,000 on revenue of $16 million in the third quarter ended Sept. 30. The company said the loss stemmed from legal fees associated with the two failed merger attempts and a loan restructuring. The company had about $22 million in debt at the end of the third quarter.

Figgie, a conglomerate that makes Rawlings baseball gloves and fire engines, among other things, had no orthopedic products until recently.

Harry Figgie III, vice chairman of the company and son of the founder, Harry Figgie Jr., is a prominent orthopedic surgeon. The company is beginning to develop and manufacture custom prostheses.

Under the agreement, Dr. Figgie would join Kirschner's board of directors and the company would market Figgie's new products.

In addition, Figgie would distribute Kirschner products through new "Centers of Excellence," designed to improve the quality and control costs of human joint replacements.

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