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Cardiac Pathways

This article was originally published in The Gray Sheet

Executive Summary

Convertible preferred stock financing with "certain accredited investors" is intended to raise $40 mil., the firm reports. The deal calls for the Sunnyvale, California-based maker of minimally invasive systems used to diagnose and treat cardiac tachyarrhythmias to issue up to 40,000 shares of Series B preferred stock at $1,000 each, convertible into 1,000 shares of common stock each. If converted, the preferred shares would constitute 79.9% of the outstanding shares of the company. The financing is designed to provide needed capital for operations and to address a net tangible asset deficiency under Nasdaq trading rules. The firm's board will resign upon the closing of the financing, and the Series B preferred shareholders will participate in naming a new board. William Starling will resign as CEO effective May 24 but remain chairman. Starling is succeeded as CEO by Thomas Prescott, former VP and general manager of Mallinckrodt's respiratory business. Cardiac Pathways recorded sales of $1.3 mil. (up 76.2%) in the third quarter ended March 31 and booked a net loss of $4.3 mil., even with last year's third-quarter loss
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