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HemCon Medical Offers Shares for Unsecured Creditors

Friday, 20 July 2012 08:59
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HemCon Medical Technologies, Inc., will seek approval at a hearing on Aug. 9, 2012, of the disclosure statement explaining its proposed Chapter 11 Plan of Reorganization.
HemCon will begin soliciting votes on the Plan and schedule a confirmation hearing after the Disclosure Statement is approved.
According to the Disclosure Statement, dated July 2, 2012, the reorganized Debtor will recapitalize by raising $8 million to
$12 million in new capital.
The Debtor plans to sell between 1 million and 1.5 million shares of Series A Preferred Stock to angel investors (including unsecured creditors and equity security holders), and sell between 2 million and 3 million shares to private equity funds or other institutional investors.  A total of between 3 million and 4.5 million shares is expected to be sold in the offering.
The Series A Preferred Shares will be issued at approximately $2.50 per share.  It will have a liquidation preference of par plus 5% per annum per share and be converted into Common Stock when the Company conducts a public offering of its Common Stock at a price of at least $7.50 per share.
The Company has already engaged in substantial discussions with various parties and received a written indication of interest from private equity.
Common Shares
Holders of general unsecured claims, which are impaired under the Plan, will be issued approximately a total of $1.1 million shares of common stock.  Common stock will be issued at the rate of one share for each $50 of unsecured debt.
One million shares of new common stock will be reserved for issuance under potential stock options for employees and directors for post-Effective Date services as stock options, restricted stock, or other stock-based grants.
HemCon is planning to increase the number of employees post-confirmation in support of its lyophilized dried plasma product and to a limited extent in the areas of sales force, manufacturing, regulatory affairs, and new product development.
Other Claims and Interest
Each holder of an unsecured claim equal to or less than $5,000 or who elects to reduce his unsecured claim to $5,000 will not receive shares but will instead be paid 50% of the allowed amount of the claim within 60 days following the later of the effective date.
Bank of America, as administrative agent, holds a secured claim on account of debt owed to BoA, Bank of the West and Silicon Valley Bank.  The secured claim will be fixed at $5 million and payable with interest from and after the Effective Date at a fixed rate equal to 4.5% per annum with interest-only payments on a monthly basis until the fifth anniversary of the Effective Date, at which time the principal balance and any remaining unpaid interest will be paid.  The claim will continue to be secured by a security interest in Reorganized Debtor's assets of the same kind and category and with the same priority that it held as of the Petition Date.  The amount of debt in excess of BoA's allowed secured claim will be treated as a general unsecured claim.
Holders of equity securities will not be entitled to any distributions on account of their existing interests, although they will have the opportunity to acquire Series A Preferred Stock in Reorganized Debtor.
A copy of the Disclosure Statement is available at:
About HemCon Medical Technologies
Portland, Oregon-based HemCon Medical Technologies Inc., fdba
HemCon, Inc. filed a Chapter 11 bankruptcy petition (Bankr. D.
Ore. Case No. 12-32652) on April 10, 2012, estimating up to
$50 million in assets and liabilities.  Founded in 2001, HemCon --
http://www.hemcon.com/ -- is a diversified medical technology
company that develops, manufactures and markets innovative wound
care, anti-microbial and oral care products for the military,
emergency medical, surgical, dental and over-the-counter markets.
HemCon has subsidiaries in the United Kingdom and Europe.
The bankruptcy filing comes after an en banc decision by the U.S.
Court of Appeals for the Federal Circuit on March 15, 2012, which
affirmed an award of $34.2 million in damages to Marine Polymer
Technologies Inc. in a patent infringement case initiated in 2006.
HemCon's European subsidiary is not subject to the Chapter 11
Judge Elizabeth L. Perris presides over the case.  Attorneys at
Tonkon Torp LLP represent the Debtor.  The petition was signed by
Nick Hart, CFO.
The Official Committee of Unsecured Creditors has retained David A. Foraker and the firm of Greene & Markley PC as counsel.
HemCon Medical Technologies, Inc., will seek approval at a hearing on Aug. 9, 2012, of the disclosure statement explaining its proposed Chapter 11 Plan of Reorganization.

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