MicroPort Scientific (0853.HK) Introduces Strategic Investors into Cardiac Rhythm Management Business

Original Title: MicroPort (00853-HK) Introduces Professional Investors for Cardiac Rhythm Management Business Source: Cailian Press

[Caihua Society News] MicroPort (00853-HK) announced that on July 3, 2020, certain member companies of the Group entered into an agreement whereby the subsidiary MicroPort International Corp. Limited (MicroPort International) and the investors (Investor A and Investor B) agreed to increase the share capital of the target company, MicroPort Cardiac Rhythm Management Limited (MCRM), by subscribing for a total of US$105 million worth of Series B preferred shares in MCRM. Upon completion of the subscription, MicroPort International’s equity interest in MCRM will decrease from 61.24% to 52.70%, and MCRM will remain a subsidiary of the Company.

Pursuant to the terms of the agreement, such investors have the right to require MCRM to redeem the Series B Preferred Shares at a redemption price equal to the sum of: (a) 100% of the original purchase price of the Series B Preferred Shares; and (b) an accrued compound annual interest rate of 8%. MCRM is an investment holding company incorporated for the purpose of holding the Group’s CRM (Cardiac Rhythm Management) business. Prior to April 2020, it had no assets and conducted no business operations. In April 2020, the Group injected the CRM business into MCRM, and MCRM became the holding company for all of the Group’s CRM businesses.

Upon the injection of the CRM business into MCRM, MCRM was held 77.84% by the Group and 22.16% by Investor A, reflecting the equity structure of the CRM business held prior to the restructuring.

On June 30, 2020, MCRM issued shares representing 4.21%, 0.38%, and 2.56% of its enlarged share capital to CRM Management, Lead Summer, and Lead Harbour, respectively, for a total consideration of approximately RMB 151 million. Each of CRM Management, Lead Summer, and Lead Harbour is an investment holding company established by the respective investors using their own funds for the purpose of holding shares in MCRM. Furthermore, MCRM has adopted an incentive share award scheme and reserved 15 million shares of the target company (representing approximately 14.17% of MCRM’s enlarged share capital).

The purpose of adopting the share award scheme is to provide the target company with flexibility in granting awards to eligible participants who contribute to the development of the target group. The scheme will be administered by a professional trustee. Since its adoption, 2,399,983 shares (representing approximately 2.27% of the existing issued shares of MCRM) have been granted under the scheme.

Investor A and Investor B: Investor A is a limited liability company incorporated in the British Virgin Islands and an investment holding company. Investor A is jointly owned by Yunfeng Fund III, L.P. (a private equity fund focusing on, among others, healthcare, internet, technology, media and entertainment, financial services, logistics, and consumer sectors) and its affiliated funds. Investor A is a substantial shareholder of the Target Company and a connected person of the Company at the subsidiary level.

Investor B is an exempted company duly incorporated and validly existing under the laws of the Cayman Islands. Hillhouse Capital Management, Ltd. serves as the sole management company of Hillhouse Fund IV, L.P., which holds Investor B. Established in 2005, Hillhouse Capital is a long-term, structurally oriented value investor with a global perspective. By bringing together professional investment and operational talent, Hillhouse Capital focuses on investing in and building high-quality, sustainable business ecosystems.