WorldHeart Enters into a Recapitalization Agreement and Receives Bridge Financing

    OAKLAND, Calif., June 23 /CNW/ -- (Nasdaq:   WHRT) World Heart Corporation
("WorldHeart") today announced that it has entered into a Recapitalization
Agreement dated June 20, 2008 among WorldHeart, 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 LP, Special
Situations Cayman Fund, L.P., Special Situations Private Equity Fund, L.P.,
Special Situations Life Sciences Fund, L.P. and Austin Marxe (collectively,
"SSF"), pursuant to which:
    (i) WorldHeart will issue approximately 300,000,000 common shares for an
aggregate purchase price of no less than US$30,000,000 (the "Issuance").  At
Closing, Venrock will invest an aggregate of approximately $10,000,000 and SSF
will invest an aggregate of approximately $9,000,000 and other investors are
in discussions to invest the remainder (such other investors, together with
Venrock and SSF, the "Investors");
    (ii) Contingent on and simultaneous with the closing of the Issuance,
Abiomed has agreed to convert the full amount of principal and interest owed
on  the US$5,000,000 8% Secured Convertible Promissory Note (the "Note")
issued to Abiomed by WorldHeart and WHI into 86,000,000 common shares of
WorldHeart (the "Conversion").  The Note is currently secured by a security
interest in all of the assets of WorldHeart and WHI.  In connection with the
Conversion, Abiomed has also agreed to terminate the warrant it holds to
purchase 3,400,000 common shares of WorldHeart, and to forgive other amounts
owed to Abiomed by WorldHeart; and
    (iii) Venrock and SSF have agreed to provide WorldHeart with a bridge
loan facility (the "Bridge Facility") under which WorldHeart may borrow up to
US$1,000,000 until the closing of the Issuance and the Conversion.
    Conditions to Closing
    The Issuance and the Conversion are subject to certain customary
conditions to closing, including the investment of no less than an aggregate
of US$30,000,000 by the Investors and the absence of certain material adverse
changes.  We expect that the closing of the Issuance and the Conversion (the
"Closing") will occur on or about July 31, 2008, although no assurances can be
given when the conditions to Closing will be satisfied, if at all.  In the
event that the Issuance and the Conversion are not consummated by August 31,
2008, Abiomed and each of the Investors have the right to terminate their
obligations under the Recapitalization Agreement.
    Reverse Stock Split
    The Recapitalization Agreement also provides that WorldHeart shall take
all action necessary to call a meeting of its shareholders to approve a
consolidation of its common shares (the "Reverse Split") for the purpose of
seeking to comply with the $1.00 minimum bid price requirement of the Nasdaq
Capital Market.
    Investor Board Nominees
    The Recapitalization Agreement further provides that each of Abiomed,
Venrock and SSF 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
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.  In addition, pursuant to existing agreements, currently SSF, on
behalf of certain investors, has the right to nominate two directors, Maverick
has the right to nominate two directors and Abiomed has the right to nominate
one director or to appoint an observer to the Board of Directors of
WorldHeart.  Neither SSF nor Maverick has any nominees currently appointed as
directors; Abiomed has appointed an observer.  Upon Closing, the existing
rights of Abiomed to nominate a director or appoint an observer will be
terminated and the number of shares of WorldHeart currently held by SSF and
Maverick will not represent a sufficient percentage of the issued shares to
entitle either SSF or Maverick to nominate directors pursuant to their current
    Abiomed Distribution Rights
    The Recapitalization Agreement also provides that, contingent upon the
closing of the Issuance, Abiomed's current distribution rights with WorldHeart
terminate and are 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 offering revised terms to Abiomed.  Abiomed's revised
distribution rights will terminate upon a change of control of WorldHeart that
occurs after the Closing.
    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 and SSF.  WorldHeart will seek approval of the equity incentive plan
at a meeting of shareholders.
    Nasdaq Requirements
    Nasdaq Marketplace Rule 4350 requires that WorldHeart obtain shareholder
approval in certain circumstances including for the issue of shares, other
than in a public offering, equal to 20% or more of the common shares
outstanding before the issuance or for the issue of shares to affiliates, in
either case if for less than the greater of book value or market value of the
common shares, or for the issue of shares which will result in a change of
control of the issuer.
    WorldHeart applied to Nasdaq for 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 WorldHeart is expressly
approved by the audit committee 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 has 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 will mail to all shareholders not
later than ten days before the Closing a letter alerting them to its omission
to seek the shareholder approval that would otherwise be required, and setting
forth the terms of the Recapitalization Agreement and the fact of reliance on
the financial viability exception.
    Protection of Minority Security Holders under MI 61-101
    Multi-Lateral Instrument 61-101 Protection of Minority Security Holders
in Special Transactions ("MI 61-101"), a securities regulation applicable in
the Provinces of Ontario and Quebec, requires that WorldHeart obtain approval
of the issue of its shares to SSF and Abiomed, each as a related party, by the
holders of a majority of the common shares other than the shares held by SSF
and Abiomed and that WorldHeart also obtain and file a formal valuation of the
Note being converted by Abiomed, unless WorldHeart qualifies for an exemption
from these requirements.  WorldHeart's Board of Directors, acting in good
faith, including all of the independent directors of WorldHeart, acting in
good faith, have determined that (i) WorldHeart is insolvent or in serious
financial difficulty, (ii) the transaction contemplated in the
Recapitalization Agreement is designed to improve the financial position of
WorldHeart, and (iii) the terms of the Recapitalization Agreement are
reasonable in the circumstances of WorldHeart.  Based on such determination,
the transaction with SSF and Abiomed is exempt from the requirements of MI
    Due to the financial circumstances of WorldHeart, the Closing of the
Issuance and the Conversion is contemplated for the earliest opportunity which
WorldHeart believes is necessary in the circumstances to allow WorldHeart to
restore its financial viability and business operations.  This may result in
WorldHeart's material change report being filed with Canadian securities
regulators less than 21 days prior to the Closing.
    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 secure the
contemplated financing, 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 immediate need for
additional capital, 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  for the year
ended December 31, 2007, its Quarterly Report on Form 10-Q for the quarter
ended March 31, 2008 and its Current Report on Form 8-K filed May 27, 2008.

For further information:

For further information: David Pellone, +1-510-563-4775, or Peggy
Allman,  +1-510-563-4721, both of World Heart Corporation Web Site:

Organization Profile


More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890