13 Jul 2010
CFO Brett Scott resigns from cost-cutting dental laser company as it re-instates former president Federico Pignatelli as executive vice chairman.
The chief financial officer (CFO) of Biolase has resigned, just one day before completing his first year at the dental laser systems company.
The development is the latest in a series of cuts, resignations and re-appointments at the Californian company, which is restructuring its business amid difficult trading conditions.
Biolase CEO David Mulder announced the departure of CFO Brett Scott on the same day that the company revealed plans to eliminate 20 positions as part of its ongoing restructure.
Also on the same day, Mulder welcomed back Biolase’s former president Federico Pignatelli to the newly-created position of executive vice chairman. Just one month earlier, the Biolase board voted to terminate Pignatelli, a 16-year veteran of the company, citing efforts to instigate a hostile take-over bid.
”The reduction in headcount along with additional expense reduction activities are expected to reduce corporate expenses by approximately $3 million on an annual basis,” read a Biolase statement announcing the changes.
Scott, who joined the company on July 14, 2009, had a clause in his contract stating that “in the event Mr. Scott is terminated by us without cause or he resigns with good reason, the total severance benefits payable would be approximately $102,500”.
However, documents filed with the US Securities & Exchange Commission (SEC) show that the former CFO will receive only $17,500 in compensation.
Management activity suggests that a power struggle for control of the company has reached boiling point within the past two months. In its quarterly results, posted on May 17, Biolase registered a sharp decline in sales year-on-year to $4.4 million.
With gross margins almost wiped out by the basic cost of those sales, the company posted a net loss of $5.3 million – up from a net loss of $4.7 million in the equivalent quarter of 2009, and putting a strain on cash assets, which stood at only $3.4 million as of March 31 this year.
Shortly after those results were announced, Biolase agreed a new $5 million loan deal with Silicon Valley Bank to help liquidity, albeit at a high rate of interest.
By June 4, Pignatelli had fired off a letter to the company’s secretary, calling for a special meeting of stockholders to be held on August 6 without consulting senior management. Viewing this as a move towards a hostile takeover, the company’s board of directors voted to terminate Pignatelli, effective immediately.