investors lose as ventracor is sold to us outf

Investors lose as Ventracor is sold to US outfitFont Size: Decrease Increase Print Page: Print Rebecca Urban | May 30, 2009
Article from: The Australian

SHAREHOLDERS of the collapsed medical device maker Ventracor are unlikely to receive any return on their investments, after creditors voted in favour of selling the company's assets, including its award-winning heart pump, to an American firm.

However, the $US8 million ($10.2 million) sale is less than certain, with the buyer still seeking bridging finance in order to complete the deal.

Ferrier Hodgson, administrator to Ventracor, will spend the weekend negotiating a sale agreement with Siqro, a shell company set up by the Californian-based Orqis Medical for the purpose of acquiring the failed heart-pump manufacturer. If an agreement is not reached by Monday, the administrator could be forced to place Ventracor, which once had a market capitalisation of more than $600million, into liquidation.

The proposed sale, to be executed via a general deed of company arrangement, was approved at a meeting in Sydney yesterday, and is considered the best shot that creditors, largely employees, have to be paid their claimed debts. Siqro has indicated that most employees would retain their jobs.

An alternative recapitalisation plan was proposed by a group representing Ventracor's 17,000 shareholders. However, it was withdrawn after cornerstone investors backing the plan pulled out, citing a lack of time to complete due diligence.

Shareholders, who have invested almost $200 million in the publicly listed company, are investigating possible grounds for a class action. The company's board, which includes former Qantas chief John Ward and former Babcock & Brown chairman Elizabeth Nosworthy, was negotiating a sale to Siqro, which would have required shareholder approval, when the administrator was appointed on March 19.

Despite the clinical success of its VentrAssist heart pump, which has been implanted in more than 400 critically ill patients worldwide, the company had been unable to attract funding. Ventracor's failure to raise $10 million via a share purchase plan before Christmas was widely viewed as a rebuff of its board and highly paid management, rather than the business itself.

In his report to creditors this week, Steve Sherman of Ferrier Hogdson said Siqro had indicated that it had at least $US28 million of funding in place, which would support Ventracor's operations for the next 12 months.

However, there is concern over who will fund the company's operations between now and June 12, the date the sale is likely to be completed. If Siqro is unable to secure bridging finance and agree to sale terms over the weekend, the company would likely be placed into liquidation, Mr Sherman is believed to have told the meeting.

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