- Equitization of the first tranche of the EIB loan will
reduce its repayment in cash and optimize the Company's cash
position
- Set-up of a trust and issuance of share warrants to the
trustee, enabling it to subscribe shares of the Company to be then
sold on the market, the proceeds of which being allocated to the
repayment of the tranche
Regulatory News:
CARMAT (Paris:ALCAR):
On February 14, 2023, the French financial markets authority
(Autorité des marchés financiers) invited companies issuing equity
securities or securities giving access to capital on a staggered
basis to adopt a standard communication and warning on the
associated risks. This warning is shown below:
Disclaimer
CARMAT is launching an operation aimed at equitizing its debt to
the European Investment Bank, which will notably involve staggered
issues of shares in the Company to a trust, followed by their sale
on the market.
As the trust does not intend to remain a shareholder of the
Company, the CARMAT shares issued in its favor will be sold on the
market very shortly after their issuance, which could create strong
downward pressure on the share price.
Shareholders may suffer a loss of their invested capital due to
a significant decrease in the value of the Company's shares, as
well as significant dilution due to the large number of shares
issued to the trust. Investors are advised to exercise caution
before deciding to invest in CARMAT securities.
Investors are invited to take note of the risks associated with
this transaction, as set out in the press release below.
CARMAT (FR0010907956, ALCAR), designer and developer of the
world’s most advanced total artificial heart, aiming to provide a
therapeutic alternative for people suffering from advanced
biventricular heart failure (the “Company” or
“CARMAT”), today announces the equitization of the first
tranche of its loan contracted with the European Investment Bank
(EIB) by the set-up of a trust and issuance of share warrants to
the trustee.
This implementation is part of the final agreement reached on
March 22, 2024 by CARMAT with its financial creditors1, including
the EIB, on new repayment terms for its bank loans. The terms of
the equitization are in all respects similar to those described
when the agreement was announced.
Stéphane Piat, CEO of CARMAT, comments: "The equitization
of the first tranche of the loan contracted with the EIB is part of
the agreement we reached last March with all our financial
creditors on the rescheduling of our bank loans and their new
repayment terms. The effective start of this equitization is an
important step and very good news, since it will enable us to
significantly reduce the cash repayment of our debt, thereby
contributing to contain our funding requirements. As our cash
runway currently extends to mid-August 2024, we continue to work on
several options to strengthen our equity and cash position over the
coming months; and remain fully mobilized to pursue the commercial
development of our therapy, which at this stage is very
encouraging."
Main terms and conditions of the equitization of the first
tranche of the loan
Under the terms of an agreement entered into on December 17,
2018, the Company contracted a €30m loan with the EIB (the "EIB
Loan Agreement"), paid in 3 tranches of €10 million
respectively on January 31, 2019 (the "First Tranche"), May
4, 2020 (the "Second Tranche") and October 29, 2021 (the
"Third Tranche" and, together with the other tranches, the
"Tranches").
Under an agreement signed on March 22, 2024, the EIB agreed to
extend the maturity of the First Tranche to July 31, 2026, and that
of the other two Tranches to August 2027 and October 2028
respectively.
In order to reduce the cash repayment due under the EIB Loan
Agreement, the Company and the EIB have also decided to launch an
equitization of the First Tranche2 to enable its gradual conversion
into CARMAT shares via a management trust set up for the purposes
of this operation and managed by IQEQ Management as a trustee,
independent from the Company and the EIB (the "Trust").
Today, EIB transferred its principal and interest receivable in
respect of the First Tranche to the assets of the Trust. For
technical reasons, this receivable was immediately assigned by the
Trust to the Company so that the latter could proceed with its
cancellation by confusion of the qualities of creditor and debtor.
This assignment of the claim to the Company did not give rise to a
cash payment but to the creation of a vendor loan (crédit vendeur)
on the Company, to the benefit of the Trust (the "Vendor
Loan").
The Trust will progressively transform the aforementioned
receivable into CARMAT shares through the exercise of share
subscription warrants (the "Warrants") which were issued to
it, free of charge, and can only be exercised by offsetting this
receivable3. The shares so issued upon each exercise will then be
progressively sold on the market by the Trust in accordance with
predefined conditions, notably taking into account market volumes4;
and the net proceeds of such sales will be paid by the Trust to the
EIB until full repayment of the sums due to it under the First
Tranche.
Payments by the Trust to the EIB will be made every two months
until the earlier of July 31, 2026, or the date on which all
amounts due to the EIB under the First Tranche have been paid. The
first payment is scheduled on July 31, 2024.
Should the net proceeds from the sale of the shares not enable
the EIB to be repaid in full by July 31, 2026 (maturity date of the
First Tranche), the Company will repay the balance due to the EIB
under the said tranche, in cash from its own treasury, on that
date5. A partial repayment in cash by the Company of the sums due
to the EIB under the First Tranche is therefore possible.
A similar mechanism to that applicable to the First Tranche
should then be put in place for the equitization of the second and
third tranches of the loan, unless the EIB decides to waive it,
which the market would be informed of.
Main terms and conditions of the issue and exercise of the
warrants, and of the sale of the shares resulting from the exercise
of the warrants
Pursuant to the Trust agreement signed for the purposes of the
equitization and on the basis of the delegation of authority
granted by the Company's Combined General Meeting of May 30, 2024
under its nineteenth resolution, the Company has today issued, free
of charge and without shareholders' pre-emptive subscription
rights, 6 million warrants to the benefit of the trustee acting on
behalf of the Trust6.
Each Warrant will entitle the holder to subscribe one share in
the Company at an exercise price equal to the lowest
volume-weighted average daily price of the Company's shares,
observed over the trading days during which the Trust has not sold
any CARMAT shares, out of the last fifteen consecutive trading days
immediately preceding their exercise date. The Warrants may be
exercised for a period of 4 years from their issue date, it being
specified that any warrant not exercised will automatically lapse
once the receivables to be "equitized" have been repaid in full to
the EIB. The warrants will not be admitted to trading on the
Euronext Growth Paris market, nor on any other financial
market.
As of this date, the trustee is in charge of:
- exercising the warrants in accordance with
the terms and conditions set out in the trust agreement, and paying
their exercise price by offsetting the claim that the Trust has
against the Company under the Vendor Loan; then
- selling progressively on the market the new
shares resulting from the exercise of the warrants, in accordance
with predefined terms and conditions, notably in terms of price and
volume7.
The new shares issued upon exercise of the warrants will carry
dividend rights. They will benefit from the same rights as those
attached to the Company's existing ordinary shares and will be
listed on the Euronext Growth Paris market on the same listing line
as existing CARMAT shares under ISIN code FR0010907956.
At the beginning of each month, the Company will publish on its
website a table including a follow-up of the number of warrants
along with the number of shares issued upon their exercise. The
Company will also publish the number of voting rights and shares
making up its share capital, in accordance with article 223-16 of
the general regulations of the AMF (French financial market
authority).
Equitization-related costs
Equitization costs are in line with market practice for capital
increases by listed companies in France, it being specified that
the trustee will not receive any variable remuneration.
Conflicts of interest
To the best of the Company's knowledge, the implementation of
equitization does not create any conflicts of interest for its
executives and corporate officers.
Prospectus
The equitization does not give rise to the preparation of a
prospectus subject to the approval of the AMF. This press release
does not constitute a prospectus under Regulation (EU) 2017/1129 of
the European Parliament and of the Council of June 14, 2017, as
amended, or a public offering.
Risk factors
Risk factors associated with
Equitization
The public's attention is drawn to the risk factors relating to
the Company and its business, presented in chapter 2 of its
universal registration document 2023 filed under number D.24-0374
with the AMF on April 30, 2024, available free of charge on the
Company's website (www.carmatsa.com) and the AMF website
(www.amf-france.org).
Readers' attention is especially drawn to the fact that the
Company's current cash runway is limited to mid-August 2024. The
occurrence of any or all of these risks could have an adverse
effect on the Company's business, financial situation, results,
development or prospects.
In addition, investors are invited to consider the specific
risks associated with the equitization:
- risk of dilution of the Company's
shareholders: the Company's shareholders will suffer dilution when
the warrants are exercised (see paragraph "Dilution linked to
equitization" below);
- risk relating to changes in the share
price: as the trustee acting on behalf of the Trust is not intended
to remain a shareholder of the Company, sales of shares issued on
exercise of the Warrants could create strong downward pressure on
CARMAT's share price, and shareholders could thus suffer a loss of
their invested capital due to a significant fall in the value of
the Company's shares;
- risk of volatility and liquidity of the
Company's shares: the sale on the market of shares issued on
exercise of the Warrants is likely to have a significant impact on
the volatility and liquidity of the Company's shares; and
- risk of the EIB not being fully repaid
through the equitization of the First Tranche of the loan: the
Company may be required to repay part of the First Tranche in cash
if, by July 31, 2026, the net proceeds from the sale of shares have
not enabled the EIB to be fully repaid in respect of the said
Tranche.
Dilution related to the
equitization
For illustrative purposes only, assuming (i) that the Warrants
are exercised at an exercise price equal to the lowest
volume-weighted average daily price of the Company's shares over
the fifteen trading days preceding May 31, 2024 (i.e. €3.00) and
(ii) the underlying shares sold at the closing price of the
Company's shares on the day before the same date, 5.6 million
warrants would have to be exercised in order to repay in full the
sums due to the EIB under the First Tranche (i.e. around €18
million); on this assumption, a shareholder holding 1% of the
Company's share capital before equitization of the First Tranche,
would see his stake reduced to 0.86% of the share capital after
equitization of this tranche.
On the basis of the same assumptions, 14.9 million Warrants
would have to be exercised to repay in full the sums due to the EIB
under the three tranches of the loan (i.e. around €47 million);
under this assumption, a shareholder holding 1% of the Company's
share capital before equitization of the three tranches would see
his stake reduced to 0.74% of the share capital after equitization
of the said tranches.
This example of dilution in no way prejudges the final number of
shares to be issued, nor their issue or sale price, which will be
determined on the basis of the stock market price prevailing at the
time of exercise of the Warrants and sale of the underlying shares,
as described in this press release.
***
About CARMAT
CARMAT is a French MedTech that designs, manufactures and
markets the Aeson® artificial heart. The Company’s ambition is to
make Aeson® the first alternative to a heart transplant, and thus
provide a therapeutic solution to people suffering from end-stage
biventricular heart failure, who are facing a well-known shortfall
in available human grafts. The world’s first physiological
artificial heart that is highly hemocompatible, pulsatile and
self-regulated, Aeson® could save, every year, the lives of
thousands of patients waiting for a heart transplant. The device
offers patients quality of life and mobility thanks to its
ergonomic and portable external power supply system that is
continuously connected to the implanted prosthesis. Aeson® is
commercially available as a bridge to transplant in the European
Union and other countries that recognize CE marking. Aeson® is also
currently being assessed within the framework of an Early
Feasibility Study (EFS) in the United States. Founded in 2008,
CARMAT is based in the Paris region, with its head offices located
in Vélizy-Villacoublay and its production site in Bois-d’Arcy. The
Company can rely on the talent and expertise of a multidisciplinary
team of circa 200 highly specialized people. CARMAT is listed on
the Euronext Growth market in Paris (Ticker: ALCAR / ISIN code:
FR0010907956).
For more information, please go to www.carmatsa.com and follow
us on LinkedIn.
Name: CARMAT ISIN code:
FR0010907956 Ticker: ALCAR
Disclaimer
This press release and the information contained herein do not
constitute an offer to sell or subscribe, nor a solicitation of an
order to buy or subscribe to CARMAT shares in any country. This
press release may contain forward-looking statements by the company
regarding its objectives and prospects. These forward-looking
statements are based on the current estimates and anticipations of
the company's management and are subject to risk factors and
uncertainties such as the company's ability to implement its
strategy, the pace of development of CARMAT's production and sales,
the pace and results of ongoing or planned clinical trials,
technological evolution and competitive environment, regulatory
changes, industrial risks, and all risks associated with the
company's growth management. The company's objectives mentioned in
this press release may not be achieved due to these elements or
other risk factors and uncertainties.
The Company's material and specific risks are those described in
its universal registration document filed with the Autorité des
Marchés Financiers (AMF) under number D.24-0374. Readers'
attention is particularly drawn to the fact that the Company's
current cash runway is limited to mid-August 2024. Readers' and
investors' attention is also drawn to the fact that other risks,
unknown or not considered material and specific, may or may not
exist.
Aeson® is an active implantable medical device commercially
available in the European Union and other countries recognizing CE
marking. The Aeson® total artificial heart is intended to replace
the ventricles of the native heart and is indicated as a bridge to
transplant for patients suffering from end-stage biventricular
heart failure (INTERMACS classes 1-4) who cannot benefit from
maximal medical therapy or a left ventricular assist device (LVAD)
and who are likely to undergo a heart transplant within 180 days of
implantation. The decision to implant and the surgical procedure
must be carried out by healthcare professionals trained by the
manufacturer. The documentation (clinician manual, patient manual,
and alarm booklet) should be carefully read to understand the
features of Aeson® and the information necessary for patient
selection and proper use (contraindications, precautions, side
effects). In the United States, Aeson® is currently exclusively
available as part of an Early Feasibility Study approved by the
Food & Drug Administration (FDA).
_________________________________________ 1 Press release March
22, 2024 2 The equitization concerns both the principal and the
interest of the First Tranche (i.e. a total amount of around €18
million), so that the Company will have nothing further to disburse
under this tranche before its maturity (except in the event of
default or early repayment, which remain unchanged), i.e. July 31,
2026. The total amount to be repaid to the EIB under the three
Tranches (principal and interest) is approximately €47 million. 3
The exercise of the warrants will not give rise to the receipt of
funds by the Company insofar as the exercise price of the warrants
will be paid by offsetting against the receivable that the Trust
holds against the Company under the Vendor Loan. 4 The broker in
charge of disposals is aiming to sell a daily volume of shares
limited to 12.5% of CARMAT's daily traded volumes, and for the sale
price to be as close as possible to the day's VWAP. 5 In this
context, the Company has granted the EIB an autonomous first demand
guarantee in the event of non-repayment, on the date agreed in the
EIB Loan Contract, of the sums due to it under the First Tranche. 6
It is specified that additional Warrants may be issued at a later
date by the Company to the trustee, acting on behalf of the Trust,
should the number of Warrants initially issued be insufficient to
fully complete the equitization of the First Tranche. 7 The broker
in charge of disposals is aiming to sell a daily volume of shares
limited to 12.5% of CARMAT's daily traded volumes, and for the sale
price to be as close as possible to the day's VWAP.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240613336642/en/
CARMAT Stéphane Piat Chief Executive Officer
Pascale d’Arbonneau Chief Financial Officer Tel.: +33 1
39 45 64 50 contact@carmatsas.com
Alize RP Press Relations
Caroline Carmagnol Tel.: +33 6 64 18 99 59
carmat@alizerp.com
NewCap Financial Communication & Investor
Relations
Dusan Oresansky Jérémy Digel Tel.: +33 1 44 71 94
92 carmat@newcap.eu
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