CATALIST-LISTED medtech company QT Vascular 5I0 : 5I0 0%on Thursday (Dec 9) announced a planned issue of new shares to repay US$1 million of debt owed to several creditors. The proposed issue would put an additional 10.3 per cent of QT Vascular's enlarged share capital in the hands of these creditors, consisting of former chief executive Eitan Konstantino, MDIE and Emerald Apex, and would likely tip the balance of voting power against shareholders trying to unseat QT Vascular's existing board.

Mission Well, which owns a 10.19 per cent stake in the company, and Tansri Saridju Benui, who owned 50,000 shares as at Nov 16 has been trying to oust Konstantino and 3 directors.

Konstantino, who used to be primarily responsible for the business development and overall management of QT Vascular, had stepped down from his role as CEO on Nov 30 in response.

The requisitioning shareholders had sought to nominate their own directors to QT Vascular's board. But at an extraordinary general meeting (EGM) on Dec 6, the resolutions of the requisitioning shareholders were defeated by a margin of 1.7 million shares or 0.3 per cent of the shares voted.

QT Vascular is now proposing to issue 217.9 million new shares at an issue price of S$0.0063, which represents a discount of about 10 per cent to the volume weighted average price of S$0.007 on its last trading day on Dec 3, to settle a debt of US$1 million. It will also issue an additional 43.6 million new shares at the same issue price to the creditors in consideration of the creditors agreeing to accept shares in lieu of cash and to agree to a moratorium on the sale or transfer of the repayment shares. This amounts to a total of 261.4 million new shares.

MDIE, which already holds a 36.8 per cent stake in QT Vascular's subsidiary TriReme Medical, will become a substantial shareholder of the company, holding about 7 per cent of the enlarged share capital.

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For illustrative purposes, QT Vascular's net asset value per share would have increased to 0.0007 US cent from 0.0003 US cent while its loss per share would remain unchanged at 0.003 US cent had the transaction taken place on Dec 31, 2020 and Jan 1, 2020, respectively.

The requisitioning shareholders want to hold a second EGM on Dec 15. But QT Vascular, in a response to queries from Singapore Exchange (SGX) Regulation, has raised objections to this.

An EGM will put QT Vascular "in a position of breaching not only (the company's) Constitution, but also the (Companies Act)", it stated. In the company's constitution, the number of directors on the board shall not be less than 2, while the Companies Act stipulated that a director of a company shall not resign or vacate his office unless at least 1 director - who is ordinarily resident in Singapore - remains in the company.

It is therefore "questionable" if the Dec 15 EGM "can be considered as validly held, or if validly held, whether the resolutions, if passed… can be considered as validly passed", it added.

In a statement sent to the media, the requisitioning shareholders claimed QT Vascular's board and management have not given the public "a fair, unbiased and balance view", and that the current management and directors "may or may not act in the best interests of shareholders" as they do not hold significant stakes in the company.

Regarding a proposed private placement and acquisition of Asia Dental Group, the requisitioning shareholders added they had no intentions reject the transactions "as suggested by the current board and management... immediately upon successful appointment". QT Vascular earlier said it planned to issue 4.1 billion new shares in a private placement at S$0.0018 per share to raise gross proceeds of S$7.3 million, and subsquently acquire Asia Dental Group for around S$7.7 million.

The requisitioning shareholders said they "intend to renegotiate the terms and conditions of the proposed transactions to the benefit of all shareholders that will reflect a fair and better valuation for the company".

Last year, Konstantino and QT Vascular's then largest shareholder, Tanhum Feld, were in the news when they took turns to offload their shares. Feld, through his vehicle MDIE, sold 150 million shares for S$2.7 million or S$0.0179 apiece on Aug 26, 2020, reducing MDIE's stake in QT Vascular then from 8.8 per cent to 2.1 per cent.

QT Vascular owes MDIE US$833,842 from a long outstanding bridging loan, secured over the company's 50 per cent plus 1 share in TriReme Medical and due for repayment on Dec 31, 2021. As for Emerald Apex, the company owes an outstanding short-term loan of US$201,841, due in April 2022.

Shares of QT Vascular 5I0 : 5I0 0% were flat at the midday trading break on Dec 9.

READ MORE

• QT Vascular shareholders signal intention to call for EGM to remove CEO, appoint own directors

• QT Vascular nominating committee raises concerns over proposed new directors ahead of EGM