World Heart tenders for all 3% unsecured convertible debentures, warrants for shares

By Jennifer Chiou

New York, June 20 - World Heart Corp. began a tender offer for all its outstanding 3% unsecured convertible debentures and for its warrants to purchase common shares, both due Sept. 15, 2009, according to an 8-K filing with the Securities and Exchange Commission.

The offers will end at 8 p.m. ET on July 19.

If investors in the Oakland, Calif.-based company's debentures convert their holdings and accrued interest at a conversion price of $1.25 per share, they will receive 10.7 million shares.

In a filing with the SEC, the company informed its debenture investors of an amendment freeing them from the obligations of the conversion and exercise agreement under the debentures.

Those who exercise their warrants will receive 10.7 million World Heart shares at an adjusted exercise price of $1.00 per share, resulting in $10.7 million gross proceeds.

Warrants are currently exercisable until September 2009 at $1.55 per share.

In connection with the tender offer and acquisition of MedQuest Products, Inc., World Heart, a global medical device company, also expects to raise up to $23 million in a private placement financing with Maverick Venture Management, LLC and to exercise certain outstanding warrants.

After the transactions are completed, World Heart expects to eliminate $11.6 million of convertibles and up to $2 million of interest payable until 2009, raise $23 million in financing proceeds and have 55.4 million outstanding shares.

Holders must convert the debentures within 14 days after shareholders approve the company's already announced acquisition of MedQuest.

The company also said it filed its definitive proxy statement with the Securities and Exchange Commission and intends to close its the acquisition, pending shareholder approval at its July 18 meeting.

"World Heart is currently the leader in pulsatile [ventricular assist device, VAD] reliability and long-term durability. Long-term VAD support, or destination therapy, represents the most significant unmet need in our field and a large, currently under penetrated, market opportunity," said Jal S. Jassawalla, World Heart president and chief executive officer, in a news release."

MedQuest, a private, Salt Lake City-based medical device company, is in the final development stages of its HeartQuest ventricular assist device.

The HeartQuest VAD is a small, next-generation rotary pump in its advanced development stage.

"We believe that our HeartQuest VAD is one of the most technologically advanced rotary pumps under development," said Pratap Khanwilkar, MedQuest president and CEO, in a release.

"Our magnetically-levitated rotor results in a centrifugal pump with no moving parts subject to wear, resulting in a small device expected to provide multiyear support over a wide range of flows."

The company's planned product platform includes the Novacor LVAS pulsator device and the Novacor II LVAS, which is a small, bearingless pulsatile VAD driven by direct magnetic actuation.

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