MDY Mdy Healthcare

RNS Number:9063F
Medisys PLC
02 December 2004


For Immediate Release                                            2 December 2004

                                  Medisys PLC
                           ("Medisys" or the "Group")

  Termination of Elan Joint Venture and Redemption of Associated B Preference
               Shares Following Successful Development of Flight

Medisys PLC announces that, following the successful development of Flight, it
has terminated the joint venture entered into with Elan Corporation plc and
certain affiliated companies in 1999 to develop biosensor blood glucose
diagnostic products (the "Joint Venture").

In addition, the Company has agreed to purchase the 5 million redeemable B
preference shares in Hypoguard Holding Co. Limited, a wholly owned subsidiary of
the Company incorporated in Bermuda ("HOLDCO"), subscribed for in 1999 by Elan
International Services Ltd ("EIS") as part of the Joint Venture (the "B
Preference Shares"). The consideration for the acquisition of the B Preference
Shares is to be satisfied by the issue of 17 million new ordinary shares of 1
pence in the Company (the "New Ordinary Shares") to EIS and the payment of
#560,000 in cash. The cash element of the consideration is to be paid in eight
equal quarterly instalments of #70,000, the first of which is due and payable on
31 December 2004 and the last of which is due and payable on 30 September 2006.

The B Preference Shares will be re-purchased by HOLDCO for nominal consideration
and cancelled.

Admission of the New Ordinary Shares to listing on the Official List of the UK
Listing Authority and to trading on the London Stock Exchange is expected to
take place on 6 December 2004.

As part of the Joint Venture termination arrangements, the parties have also
agreed that, in relation to the 13 million redeemable A preference shares issued
by HOLDCO in 1999 pursuant to the Joint Venture, the holder's JVCO Share
Exchange Right, set out in more detail below, will effectively be terminated.
Subject to this amendment in the rights attaching to the A Preference Shares,
the A Preference Shares remain outstanding together with the C Preference Shares
(as detailed below).

David Conn, Chief Executive Officer of Medisys PLC said:

"Our joint venture with Elan was successful in providing early-stage funding to
Medisys to develop the Flight product, which is now being sold by Wal*Mart under
the NewTek ReliOn brand. Having served its intended purpose, we believe that it
is now appropriate that the venture is being terminated on a mutually acceptable
basis.

"In particular, I am pleased that the terms of the settlement restrict the
dilution resulting from the repurchase of the B Preference shares to less than
4% of the current Medisys Ordinary Shares outstanding."

Background
In 1999, Medisys announced that it had entered into a joint venture with Elan
Corporation plc, the Irish speciality pharmaceutical group and certain
affiliated companies ("Elan"), for the development of biosensor-based blood
glucose diagnostic products. In addition, the Joint Venture acquired the rights
to certain technologies relating to the in-vivo monitoring of blood glucose in
diabetics from Marathon Medical Technologies, Inc. ("Marathon"), a joint venture
company owned by BioJect Medical Technologies, Inc. and Elan.

Under the terms of the Joint Venture, Hypoguard Limited (a wholly owned
subsidiary of Medisys) and Elan each provided a worldwide exclusive licence to
certain technologies to Hypoguard Development Co Limited ("JVCO"), a newly
incorporated wholly owned subsidiary of Medisys. In addition, Hypoguard licensed
to JVCO its Arrow technology and Elan granted a licence to JVCO of an enabling
pump technology. JVCO acquired from Marathon certain patent and intellectual
property rights licensed from the Elan Group relating to technologies used in
in-vivo monitoring of blood glucose in diabetics.

In order to enable JVCO to fund the licence and assignment fees and the
development of the technologies, certain funding was provided by Elan.

EIS subscribed for 13 million redeemable A preference shares in HOLDCO for a
total subscription price of US$13 million. The shares are generally redeemable
at par plus a premium of 5% per annum at any time between the second and ninth
anniversaries of their issue, although Medisys has the right to apply the
proceeds of redemption towards the issue to the holder of new Medisys Ordinary
Shares at a price of US$0.7505 per share.

The holder also had the right to require that the proceeds of redemption be
applied towards the purchase by the holder from HOLDCO of 50% of the issued
share capital of JVCO (the "JVCO Share Exchange Right") save that Medisys could,
at its option, deny this right by (a) the issue to the holder of new Medisys
Ordinary Shares at a price of US$0.4938 per share and (b) the payment to the
holder of a royalty based on market sales of products developed by JVCO.

EIS subscribed for 5 million redeemable B preference shares in HOLDCO for a
total subscription price of US$5 million. The shares are generally redeemable by
the holder at par plus a premium of 6% per annum at any time between the second
and ninth anniversaries of their issue, although Medisys has the right to apply
the proceeds of redemption towards the issue to the holder of new Medisys
Ordinary Shares at a price of US$0.6518 per share provided the market price of
Medisys Ordinary Shares is greater than US$0.6518. In the event that the market
price of Medisys Ordinary Shares is less than US$0.6518, then the market price
of Medisys Ordinary Shares would become the conversion price and the applicable
redemption premium increases on a scale from 6% to a maximum of 15% per annum.
The maximum applicable redemption premium is reached when the market price for
Medisys Ordinary Shares is US$0.4120 per share.

EIS also subscribed for 4 million redeemable C preference shares in HOLDCO for a
total subscription price of US$4 million. The shares are generally redeemable by
the holder at par plus a premium of 15% per annum at any time between the second
and ninth anniversaries of their issue, although Medisys has the right to apply
the proceeds of redemption towards the issue to the holder of 8,101,266 new
Medisys Ordinary Shares.

                                    - Ends -

Enquiries:

Medisys PLC                                                        020 7563 5200
Michael Barry, Chief Financial Officer

Weber Shandwick Square Mile                        07747 602 739 / 020 7067 0700
Kevin Smith / Sarah MacLeod





                      This information is provided by RNS
            The company news service from the London Stock Exchange

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