OAKLAND, Calif., Aug. 1 /CNW/ -- (Nasdaq: WHRT) World Heart Corporation
("WorldHeart") today announced that it completed a US$30 million private
placement transaction and recapitalization previously announced under the
terms of the Recapitalization Agreement (the "Recapitalization Agreement")
dated June 20, 2008 and amended on July 31, 2008 to, among other things,
include New Leaf Ventures II, L.P ("New Leaf") as an additional investor.
WorldHeart will pay an aggregate cash commission of US$750,000 and issue
warrants to purchase an aggregate of 2,500,000 common shares to its advisors,
Pacific Growth Equities, LLC and Stifel, Nicolaus and Company. The warrants
are subject to shareholder approval and will have an exercise price of US$0.11
per share. The Recapitalization Agreement entered into by WorldHeart includes
its wholly owned subsidiary World Heart Inc. ("WHI"), Abiomed, Inc.
("Abiomed"), Venrock Partners V, L.P., Venrock Associates V, L.P. and Venrock
Entrepreneurs Fund V, L.P. (collectively "Venrock"), Special Situations Fund
III QP, L.P., Special Situations Cayman Fund, L.P., Special Situations Private
Equity Fund, L.P., Special Situations Life Sciences Fund, L.P. and Austin W.
Marxe (collectively "SSF") and New Leaf, pursuant to which:
(i) WorldHeart issued 300,000,000 common shares for an aggregate purchase
price of US$30,000,000 (the "Issuance"), of which Venrock invested
US$11,000,000, SSF invested US$9,000,000 and New Leaf invested US$10,000,000;
(ii) Simultaneously with the closing of the Issuance, Abiomed converted
the full amount of principal and interest owed on the US$5,000,000 8% Secured
Convertible Promissory Note (the "Note") previously issued to Abiomed by
WorldHeart and WHI into 86,000,000 common shares of WorldHeart (the
"Conversion"), released the security interest in all of the assets of
WorldHeart and WHI that secured the Note, terminated the warrant it held to
purchase 3,400,000 common shares of WorldHeart, forgave other amounts owed to
Abiomed by WorldHeart and terminated all previously existing agreements,
arrangements and understandings with WorldHeart; and
(iii) The purchase price delivered by Venrock and SSF at the closing was
offset by the principal and interest owed on the bridge loan facility of
US$1,400,000 (the "Bridge Facility") Venrock and SSF provided WorldHeart prior
Reverse Stock Split
The Recapitalization Agreement also provides that WorldHeart will call a
special meeting of its shareholders to vote on, among other things, the
approval of a reverse split of its common shares (the "Reverse Split") for the
purpose of seeking to comply with the US$1.00 minimum bid price requirement of
the NASDAQ Capital Market.
Investor Board Nominees
The Recapitalization Agreement further provides that each of Abiomed,
Venrock, SSF and New Leaf will have the right to designate one person for
election to the Board of Directors of WorldHeart, so long as each remains the
beneficial owner of at least 5% of the outstanding common shares of
WorldHeart. Abiomed will also have the right to designate an observer to
attend meetings of the Board of Directors at any time it does not have a
designee on the Board of Directors. If Abiomed has not nominated a director
on or prior to the second anniversary of the closing, the rights of Abiomed to
nominate a director or to appoint an observer will terminate. All of
Abiomed's rights with respect to the Board of Directors of WorldHeart will
terminate on the fifth anniversary of the closing. WorldHeart currently has a
Board of Directors consisting of four directors, subject to Canadian rules
requiring 25% of the directors to be Canadian residents. WorldHeart will seek
to elect a new slate of board members at the special meeting of shareholders.
Abiomed Distribution Rights
The Recapitalization Agreement provides that Abiomed's current
distribution rights with WorldHeart be terminated and replaced with revised
distribution rights. Under the revised terms, WorldHeart will still be
required to negotiate in good faith with Abiomed about distribution
arrangements before engaging any third-party distributors for its products.
However, WorldHeart retains the right, without negotiating with Abiomed, to
distribute its products directly. In addition, if Abiomed and WorldHeart are
unable to agree to terms on a potential distribution arrangement, WorldHeart
is free to negotiate with third-party distributors without giving revised
terms to Abiomed. Abiomed's revised distribution rights will terminate upon a
change of control of WorldHeart pursuant to the terms of the Recapitalization
Equity Incentive Plan
The Recapitalization Agreement also provides that promptly following the
closing, WorldHeart will establish an equity incentive program for the benefit
of its independent directors, officers, employees and consultants covering,
together with its existing plans, a maximum of 44,000,000 common shares of
WorldHeart (to be adjusted for the reverse share split and any other
recapitalization) on such terms and conditions as shall be approved by
WorldHeart's Board of Directors, including the designees, if any, of Abiomed,
Venrock, SSF and New Leaf. WorldHeart will seek approval of the equity
incentive plan at the special meeting of shareholders.
Nasdaq Marketplace Rule 4350 requires that WorldHeart obtain shareholder
approval in certain circumstances, including for the issuance of shares other
than in a public offering equal to 20% or more of the common shares
outstanding before the issuance or to affiliates, in either case if for less
than the greater of book value or market value of the common shares, or for
the issuance of shares which will result in a change of control of the issuer.
WorldHeart received from Nasdaq an exception from the Marketplace Rule
4350 in reliance on Nasdaq Marketplace Rule 4350(i)(2) which provides that
Nasdaq may make an exception to the Marketplace Rules when (i) the delay in
securing shareholder approval would seriously jeopardize the financial
viability of the enterprise and (ii) reliance by the issuer is expressly
approved by an audit committee of the issuer comprised solely of independent,
disinterested directors. The audit committee of the Board of Directors of
WorldHeart expressly approved such reliance. The Listings and Qualifications
Department of Nasdaq granted the requested exception permitting WorldHeart to
issue the 386,000,000 common shares contemplated in the Recapitalization
Agreement, which is significantly in excess of the approximately 2,300,000
common shares which WorldHeart would have been permitted to issue under
Nasdaq's Marketplace Rule 4350 without shareholder approval or this exception.
Pursuant to this exception, WorldHeart mailed to its registered shareholders a
letter alerting them that it would not seek the shareholder approval that
would otherwise be required without receipt of the exception from Nasdaq and
setting forth the terms of the Recapitalization Agreement and the fact of
reliance on the financial viability exception.
About World Heart Corporation
WorldHeart is a developer of mechanical circulatory support systems.
WorldHeart is headquartered in Oakland, California, USA with additional
facilities in Salt Lake City, Utah and Herkenbosch, Netherlands. WorldHeart's
registered office is Ottawa, Ontario, Canada. Any forward-looking statements
in this release are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and include all statements regarding
WorldHeart's ability to regain compliance with the Nasdaq Capital Market
listing requirements, as well as other statements that can be identified by
the use of forward-looking language, such as "believes," "feels," "expects,"
"may," "will," "should," "seeks," "plans," "anticipates," or "intends" or the
negative of those terms, or by discussions of strategy or intentions.
Investors are cautioned that all forward-looking statements involve risk and
uncertainties, including without limitation: WorldHeart's need for additional
capital in the future; risks in product development and market acceptance of
and demand for WorldHeart's products; delisting from the NASDAQ Stock Market
if compliance with the listing standards, including the Minimum Bid Price Rule
and other minimum standards, is not regained; and other risks detailed in
WorldHeart's filings with the U.S. Securities and Exchange Commission,
including without limitation its Annual Report on Form 10-KSB/A for the year
ended December 31, 2007 and its Quarterly Report on Form 10-Q/A for the
quarter ended March 31, 2008.
THIS RELEASE DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY ANY SECURITY. THE SHARES OFFERED HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR ANY STATE THEREOF
ABSENT REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN APPLICABLE EXEMPTION FROM REGISTRATION REQUIREMENTS.
For further information:
For further information: Mr. David Pellone, +1-510-563-4775, or Ms.
Peggy Allman, +1-510-563-4721, both of World Heart Corporation Web Site: