LifeWave, the company chaired by former politician Haim Ramon, is closing up shop after wiping out 99% of investors' value, the company admitted to investors over the Sukkot holiday.
The company's operations are being sold to a group headed by biotech entrepreneur Ron Weissberg. The sale will leave LifeWave a publicly listed company devoid of operations, which will then merge with Globe Investment House, which focuses on construction and development in Nigeria.
Ramon used to be a minister and one of Kadima's top politicians before leaving politics in 2009.
LifeWave develops a device for treating chronic sores. The company, controlled by Reuven Shulman, was worth more than NIS 1 billion in 2007, after its share price shot up 900% within four months of its IPO.
But LifeWave's cash ran out in 2012, and its owners were not ready to inject more capital. This sent the company's share price plummeting, leaving it with a market cap of only NIS 8.5 million.
Over the years, LifeWave spent a significant sum on salaries, particularly those of Ramon - who served as board chairman - and CEO Michelle Ifergan.
When Ramon took the job in 2009, his contract called for NIS 25,000 in pay, plus an extra NIS 5,000 a month for his first year due to "the extensive amount of time needed to learn about the company's business." He also was granted options worth NIS 1.3 million at the time.
Between 2009 and 2012, his salary cost the company a total of NIS 1.7 million, including NIS 1.1 million in options that were from the money during his period of employment.
Weissberg intends to merge LifeWave's bed sore treatment operations into a skeleton company listed in New York.
Under the deal, LifeWave will receive NIS 1.25 million to pay off its obligations and will be eligible for royalties for any future revenue the U.S. company makes in the next 10 years. LifeWave will receive 20% of all revenues over the next two years and 10% for the eight years afterward.
Ramon stated that the deal gives the shareholders double value. "The merger with Globe, which has extensive business, will give the company significant operations, while shareholders will enjoy future profit thanks to the company's increase in value due to the merger with Globe as well as due to expected revenues," he said.