MicroPort CardioFlow Files Prospectus Following $50M Series C Funding and Equity Restructuring

MicroPort(00853) announced that on March 22, 2019, MicroPort CardioFlow, the original shareholders, the original Series B investors, the Series C investors, Shanghai MicroPort Limited (the controlling shareholder), a wholly-owned subsidiary of the Company, the target company MicroPort CardioFlow Medtech Corporation, CardioFlow BVI, CardioFlow Hong Kong, and Shanghai Huahao entered into a framework agreement regarding the equity restructuring of MicroPort CardioFlow.

Upon completion of the restructuring (without taking into account the Series C investment), the controlling shareholder will directly hold approximately 64.7151% of the share capital of the Target Company; the Target Company will indirectly hold all issued shares of CardioFlow BVI through MicroPort BVI (a wholly-owned subsidiary of the Target Company), and CardioFlow BVI will directly hold 100% of the equity interest in MicroPort CardioFlow; and the original shareholders and Series B investors will directly or indirectly hold shares in the Target Company in proportion to their respective equity interests in MicroPort CardioFlow prior to the restructuring.

On the same day, the Target Company, CardioFlow BVI, CardioFlow HK, MicroPort CardioFlow, the Controlling Shareholder, Chenxue Investment, and the Investors entered into a Share Purchase Agreement regarding the Reorganization (including the Series C Investment) after independent negotiations on an arm’s length basis. Pursuant thereto, the Series C Investors agreed to subscribe for 12,500,000 shares of preferred stock of the Target Company for US$50 million. The Series C Shares shall represent 12.5000% of the enlarged share capital of the Target Company upon completion of the Reorganization (including the Series C Investment). The Target Company, CardioFlow BVI, CardioFlow HK, MicroPort CardioFlow, the Controlling Shareholder, Shanghai MicroPort, and the Investors also entered into a Shareholders’ Agreement on March 22, 2019, and agreed to adopt the Amended and Restated Memorandum and Articles of Association upon closing, pursuant to which the Investors shall be granted redemption rights.

Upon completion of the Series C investment, the controlling shareholder’s shareholding in the Target Company will decrease to 56.6257%, while the Series C investors will hold a 12.5000% equity interest. Upon completion of the restructuring (including the Series C investment), the Target Company and MicroPort CardioFlow will remain subsidiaries of the Company.

It is understood that the Target Company was established in January 2019 for the purpose of restructuring. Accordingly, it has not prepared financial statements covering a full fiscal year and currently does not hold any significant assets. Upon completion of the restructuring (including the Series C financing), MicroPort CardioFlow will become the principal operating subsidiary of the Target Company.

MicroPort CardioFlow is a limited liability company incorporated in China and a leading Chinese developer and manufacturer of high-end interventional cardiac valve medical devices, with an extensive product R&D portfolio in the innovative field of interventional cardiac valves. MicroPort CardioFlow reported net losses of RMB 30.776 million and RMB 51.63 million in 2017 and 2018, respectively.

Furthermore, Qianyi Investment I L.P., a Series C investor, is a limited partnership established under the laws of the Cayman Islands, with its principal business activities being investment and holding in the healthcare industry. Its general partner is Qianyi Investment Limited.

The Company stated that the restructuring (including the issuance of Series C shares to Series C investors) would once again introduce external investors to MicroPort CardioFlow, further optimize its equity structure, and bring additional market resources. This will supplement the working capital required for MicroPort CardioFlow’s product research and development, manufacturing, and market expansion, thereby more effectively promoting business development and enhancing market competitiveness. The net proceeds raised from the Series C investment are expected to amount to approximately USD 49.85 million, which will be used for MicroPort CardioFlow’s research and development expenses and general working capital.