Thu Apr 27, 2006 4:46 PM ET LOS ANGELES, April 27 (Reuters) - CABG Medical Inc. ( CABG ) said on Thursday that its shareholders voted overwhelmingly to approve the company's plan of liquidation and dissolution.
As a result, the company said its common stock will cease trading on the Nasdaq exchange effective Friday. <<
[Those who invested at the IPO and held to the end lost 75% of their money, but I still admire the company for liquidating and returning the cash rather than running the business into the ground, as is so often done when a business fails.]
By Janet Moore Minneapolis Star Tribune April 27, 2006
Shareholders of CABG Medical Inc. voted Thursday to shut down the medical technology company after clinical trials testing its method for coronary bypass surgery failed last year.
"I put my heart and soul into this company," founder and CEO Manny Villafana -- a well-known med-tech entrepreneur in the Twin Cities -- said at a special shareholders meeting.
But one shareholder, who declined to give her name, grumbled about the "big payout" Villafana will receive from the 5.8 million shares he bought for $48,000 when the company was incorporated in 1999. That stake is now worth about $8.53 million.
Many shareholders bought stock at $5.50 a share when CABG went public in late 2004, an offering that raised about $31 million. The liquidation, approved by 98 percent of shareholders, calls for them to receive $1.47 a share.
Villafana defended his stake, saying he spent 6½ years trying to build the company, traveling the world to market the product, and he noted that "we're giving money back to the shareholders; 99.9 percent of the time when a company fails it's just run into the ground. We didn't do that."
He has declined a severance and bonus of about $1.28 million.
After CABG went public, it launched clinical trials abroad to test its Holly Graft System, which involved using artificial blood-vessel grafts during coronary bypass surgery. In August, CABG reported that grafts implanted in two Australian patients became blocked and were no longer functional. Later, grafts in 12 of 35 patients had the same problem, and two deaths were reported. The company says one of those deaths wasn't related to the device and the other occurred as the graft was removed from the patient before the surgery was completed.
CABG said in February that it would be futile and expensive to redesign the trials and that it was seeking a buyer.
Villafana said the company entertained one serious bid but rejected it because the payout to shareholders would have been less than what they would get in a liquidation. <<
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