CBAI News
Cord Blood America, Inc. Announces Sale of Stake in stellacure, GmbH to Medivision
2012-10-04 08:00 ET - News Release
LAS VEGAS , Oct. 4, 2012 /PRNewswire/ -- Cord Blood America, Inc . ( www.cordblood-america.com ) (OTC Bulletin Board: CBAI) ("CBAI" or the "Company") today announced that it has sold its 51% stake in its German subsidiary, stellacure, GmbH ("stellacure") to Medivision mbH, headquartered in Hamburg, Germany ("Medivision"), for approximately 33,649 Euros or $43,420 . A principal of Medivision was also a minority shareholder in stellacure prior to closure of this deal. Other minority shareholders, with the exception of the German Red Cross, agreed to sell their positions in stellacure to Medivision pro rata to the terms of CBAI. "There were primarily three options facing us as we evaluated stellacure; we could continue to invest, we could sell our stake at a highly discounted position, or allow for a bankruptcy filing. Regarding further investment, we concluded several months ago that we were not going to provide any additional funding to stellacure, and in fact, have not provided any working capital under the terms of the loan agreement since September of 2011" commented Joseph Vicente , President of Cord Blood America. "There was no clear path regarding the additional time or incremental capital stellacure would require to achieve profitability. In our most recent 2012 second quarter filing, stellacure experienced a 28.3% decline in revenues compared to same period in 2011. Those revenues accounted for 6.3% of the total consolidated revenues for the Company, and stellacure was the only operating unit to post an operating loss which totaled over $100,000 . The capital needed to sustain the ongoing operating losses is much better served in our current debt restructuring initiatives which we first announced in early July and continue to focus on as we improve the capital structure of the Company. In addition to the elimination of the consolidated operating loses, we expect save approximately $40,000 in annual professional service fees." Mr. Vicente concluded, "With the decision made not to provide additional funding, we were faced with the imminent filing of bankruptcy if the business was not sold. With an interested party coming forward to acquire stellacure, we concluded that our ability to secure a waiver against all past and future claims, along with a nominal amount of cash, as the key factors resulting in our decision to sell our stake in stellacure. The protracted uncertainty surrounding a bankruptcy is something we wanted to avoid as we position CBAI for the future. Regarding the Company's financial statements, we are going to take a one time charge in our third quarter, 2012, as we write off a significant portion of the loan to stellacure. Going forward, we are confident we are a stronger company financially as we eliminate a subsidiary that we believe was not able to produce growth and/or profitability for the foreseeable future."
