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Ventracor in fund raising of last resort
CITY BEAT: Rebecca Urban | October 22, 2008
VENTRACOR, a one-time darling of the health care industry, is considering the fund raising of last resort: a convertible note issue.
The heart device maker, which burns about $28million in cash a year, is believed to have employed mid-tier investment bank Cowen Group in the US and ABN AMRO Morgans in Australia to find prospective buyers for the complex debt instruments.
The decision to opt for the notes, which typically contain stringent covenants and eventually convert to shares, comes after several failed attempts by Ventracor to tap the institutions and sophisticated investors that have supported its past capital raisings.
That's hardly surprising given its most recent share placement in May last year was conducted at 80c, whereas the stock is now trading at about 12c.
In spite of that, Ventracor is run by a very well compensated Peter Crosby, who picked up a $264,000 cash bonus and $468,000 worth of performance shares last financial year, taking his salary to $1.4 million. Not bad for a company with a market capitalisation of less than $40 million.
Crosby's long-suffering shareholders, who've put close to $80 million into the company in the past two years on the promise its VentrAssist device for people suffering heart failure was getting closer to market, must be getting anxious.
Auditors for the company warned recently that it needed to raise between $18 million and $22 million to fund its operations over the next 12 months, and highlighted the risk it would not be able to continue as a going concern unless capital-raising initiatives were successful.
Meanwhile, Ventracor has yet to release its annual report and has put off holding its annual shareholder meeting until late November, a month later than usual.
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http://www.theaustralian.news.com.au/business/story/0,,24531077-30538,00.html
...part of the Directors declaration in previoulsy released results flies in the face of Auditors comments -
"...(b) there are reasonable grounds to believe that Ventracor Limited will be able to pay its debts as and when they become due and payable; and..."
VCR
ventracor limited
