Proposed Issue of Convertible Loan Notes to Raise 3 Million 1 for 200 Share Consolidation and Regulatory and Trading Update

Transcription

1 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, NEW ZEALAND, JAPAN OR SOUTH AFRICA. THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR FORM PART OF AN OFFER OF OR INVITATION TO SELL OR ISSUE OR ANY SOLICITATION OF AN OFFER TO PURCHASE OR SUBSCRIBE FOR ANY SECURITIES IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS UNLAWFUL NOR SHALL THIS ANNOUNCEMENT (OR ANY PART OF IT) OR THE FACT OF ITS DISTRIBUTION FORM THE BASIS OF, OR BE RELIED UPON IN CONNECTION WITH, OR ACT AS AN INDUCEMENT TO ENTER INTO, ANY CONTRACT OR COMMITMENT TO DO SO. ANY FAILURE TO COMPLY WITH THESE RESTRICTIONS MAY CONSTITUTE A VIOLATION OF THE APPLICABLE SECURITIES LAWS IN SUCH JURISDICTIONS. THIS ANNOUNCEMENT DOES NOT CONSTITUTE A PROSPECTUS FOR THE PURPOSES OF THE PROSPECTUS RULES AND HAS NOT BEEN, AND WILL NOT BE, APPROVED BY OR FILED WITH THE FINANCIAL SERVICES AUTHORITY. THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFERING OF SECURITIES FOR SALE IN THE UNITED STATES AND NO SECURITIES HAVE BEEN OR WILL BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT 1933, AS AMENDED (THE SECURITIES ACT ) OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION IN THE UNITED STATES NOR WILL THEY QUALIFY FOR DISTRIBUTION UNDER ANY OF THE RELEVANT SECURITIES LAWS OF CANADA, AUSTRALIA, SOUTH AFRICA OR JAPAN, NOR HAS ANY PROSPECTUS IN CONNECTION WITH THE SECURITIES BEEN LODGED WITH OR REGISTERED BY THE AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION. THE SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES, UNLESS REGISTERED UNDER THE SECURITIES ACT, OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION. THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES. Lombard Medical Technologies PLC Proposed Issue of Convertible Loan Notes to Raise 3 Million 1 for 200 Share Consolidation and Regulatory and Trading Update Convertible loan notes to provide additional working capital ahead of Aorfix U.S. approval anticipated during Q Trading update highlights strong momentum for Aorfix, with 2011 European sales up 50% London, UK, 9 March 2012 Lombard Medical Technologies PLC (AIM: LMT) ( Lombard Medical or the Company ), the specialist medical technology company focussed on innovative vascular products, today announces that it is proposing to raise 3 million (before expenses) through the issue of convertible loan notes ( CLNs ) to its largest shareholder, Invesco Asset Management Limited, a wholly-owned subsidiary of Invesco Limited, acting as agent for and on behalf of its discretionary managed clients ( IAML ). The CLNs are intended to strengthen the Company s working capital position should there be any unforeseen delay to FDA approval for Aorfix beyond the third quarter of The Company does not currently anticipate such a delay. 1

2 The U.S. Food and Drug Administration ( FDA ) has confirmed that the pre-market approval ( PMA ) for Aorfix, Lombard Medical s flexible stent graft for the endovascular repair of abdominal aortic aneurysms ( AAAs ), has been accepted for review. The FDA has also granted the Company permission to treat a further 50 patients in the U.S. under its continued access program whilst the PMA is reviewed by the FDA. The Company continues to expect FDA approval to include an indication to treat patients with angulations at the neck (top) of the aneurysm of up to 90 degrees. Indeed, Aorfix is the only endovascular stent graft to have this high angle indication in Europe. While the Company still anticipates FDA approval of Aorfix within its previous guidance of between the first and third quarters of 2012, it believes that it is now most likely to be obtained during the third quarter of However, any approval process with a regulatory authority such as the FDA can be subject to delays beyond the control of the applicant, so there remains a possibility that approval may instead be obtained during the fourth quarter of Assuming that the Company obtains FDA approval before the end of 2012, this will trigger receipt by the Company of the second tranche of the 27.5 million financing announced on 20 April 2011, amounting to 14.2 million ( 13.6 million net of expenses). The Company intends to use funds received from the second tranche of such financing to redeem the full amount of the CLNs and to launch Aorfix in the U.S. through its own sales force. The Company believes that there is a need for it to put in place sufficient financing to strengthen it s working capital position should there be any unforeseen delay in FDA approval beyond the end of the third quarter of Such proceeds, together with the Company s existing cash resources, will be applied towards general working capital purposes to ensure that the Company is able to continue operating at current levels should a short delay occur in the FDA approval. Having sought quotes from several finance providers, the Company is pleased that IAML has offered the most attractive financing option. The loan notes have been issued at a commercially competitive rate and carry an 8% coupon compounded annually. Both the notes and any unpaid interest can be converted into ordinary shares at 0.7p per share ( 1.40 per share following the proposed share consolidation) between 1 July 2013 and 1 September The notes are repayable by the Company on 1 September 2013, subject to any conversion rights being exercised by the CLN holder. Today, Lombard Medical also provides an update on trading for the financial year ended 31 December Sales in the second half of 2011 increased, with unaudited total revenues for the year of approximately 4 million (2010: 3 million). Aorfix sales increased 50% in the four main EU markets (UK, Germany, Italy and Spain) to approximately 2.25 million. UK revenue grew 26% and net cash at 31 December 2011 was 7.5 million (unaudited). The Company expects to report its preliminary results for the year ended 31 December 2011 on 29 March The Company is also taking this opportunity to implement a consolidation of the Company s ordinary share capital on the basis of 1 new ordinary share of 20 pence for every 200 existing ordinary shares of 0.1 pence each. The proposed issue of the CLNs and the proposed share consolidation are both subject to the approval of the shareholders of the Company at a General Meeting to be held on 27 March A circular containing a notice convening the General Meeting will be posted to the Company's shareholders today. Commenting on the announcement Simon Hubbert, Chief Executive Officer of Lombard Medical, said: We have today announced continued strong growth of Aorfix in Europe, with sales up 50% in With the PMA of Aorfix accepted for review by the FDA, we remain confident of its timely approval in the U.S., the largest market for this uniquely differentiated stent graft. The proposed issue of convertible loan notes is a proactive, financially prudent step by the Company to ensure that we are able to continue moving ahead with Aorfix, preparing for a 2

3 U.S. launch as well as continuing to drive sales in Europe. We welcome the continued support of Invesco, our largest shareholder. Expected timetable of principal events Announcement of the Issue, date of the Circular and posting of the Circular and the Forms of Proxy 9 March 2012 Latest time and date for receipt of completed Forms of Proxy a.m. on 23 March 2012 General Meeting a.m. on 27 March 2012 The results of General Meeting announced through a Regulatory Information Service 27 March 2012 Expected Record Date for the Share Consolidation 6.00 p.m. on 27 March 2012 Expected date on which New Ordinary Shares will be admitted to trading on AIM and the Effective Date of the Share Consolidation 8.00 a.m. on 28 March 2012 Expected date by which CREST accounts are to be credited 28 March 2012 Expected date by which definitive new share certificates are to be despatched 12 April 2012 Each of the times and dates in the above timetable is subject to change. If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by announcement through a Regulatory Information Service. References to time in this announcement are to London time. The timetable above assumes that the resolutions proposed in the Notice of General Meeting, set out at the end of the Circular, are passed at the General Meeting. The Company s SEDOL code is B0Q5QP5 and ISIN code is GB00B0Q5QP56. Following the Share Consolidation, the Company s new SEDOL code will be B7FT8W8 and its new ISIN code will be GB00B7FT8W85. Enquiries: Lombard Medical Technologies PLC Tel: +44 (0) John Rush, Chairman Simon Hubbert, Chief Executive Officer Ian Ardill, Chief Financial Officer Collins Stewart Europe Limited Tel : +44 (0) Jamie Adams Mark Dickenson Nick Stamp FTI Consulting Tel: +44 (0) Simon Conway Jonathan Birt Susan Quigley 3

4 Collins Stewart Europe Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as nominated adviser to the Company in relation to the transaction referred to in this announcement. The responsibilities of Collins Stewart Europe Limited as the Company s nominated adviser under the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange and are not owed to the Company or to any Director or to any person. Persons receiving this announcement should note that Collins Stewart Europe Limited will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for advising any other person on the arrangements described in this announcement. Collins Stewart Europe Limited has not authorised the contents of, or any part of, this announcement and no liability whatsoever is accepted by it for the accuracy of any information or opinions contained in this announcement or for the omission of any information. The delivery of this announcement shall not, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this announcement nor that the information in it is correct as of any subsequent time. This announcement may contain forward-looking statements that reflect the Company s current expectations regarding future events. Actual events could differ materially from those projected herein and depend on a number of factors and, accordingly, reliance should not be placed on such statements. 4

5 Proposed Issue of Convertible Loan Notes to raise 3 million, Share Consolidation and Notice of General Meeting 1. Introduction Lombard Medical announces today that the Company is proposing to raise 3 million (before expenses) through the issue of the Convertible Loan Notes to IAML. The net proceeds of the Convertible Loan Notes, together with the Company s existing cash resources, will be applied towards general working capital purposes to ensure that the Company is able to continue operating at current levels should a short delay occur in the FDA approval process (although no such delay is currently anticipated by the Company). If approval is obtained before the end of 2012, this will trigger receipt of the second tranche of 14.2 million ( 13.6 million net of expenses) from the May 2011 Fundraising, which the Company intends to use to redeem the full amount of the Convertible Loan Notes and to launch Aorfix in the U.S. through Lombard Medical s own sales force. Application will not be made to the London Stock Exchange for the Convertible Loan Notes to be admitted to trading on AIM. Application will, however, be made to the London Stock Exchange for the CLN Shares to be admitted to trading on AIM in the event that Conversion occurs. The Issue is conditional upon, amongst other things, the Directors obtaining appropriate Shareholder authorities at the General Meeting to allot the CLN Shares and to disapply preemption rights which would otherwise apply on the issue and allotment of the CLN Shares in the event that Conversion occurs. Pursuant to the Issue, IAML could increase its stake, in the event of Full Conversion, to 45.2 per cent. of the voting rights of the Company which, without a waiver of the obligations under Rule 9 of the Code, would require IAML to make a Rule 9 Offer to acquire all of the Ordinary Shares not already owned by it. The Panel has approved a waiver of the obligations of IAML to make a Rule 9 Offer without the requirement for the waiver to be approved by the Independent Shareholders at a general meeting following receipt of written confirmations agreeing to such waiver given by the Majority Shareholders, as Shareholders holding, in aggregate, in excess of 50 per cent. of the shares of the Company capable of being voted at a general meeting of the Independent Shareholders. The Company is also taking this opportunity to propose the implementation of a consolidation of the Company s ordinary share capital on the basis of 1 New Ordinary Share of 20 pence for every 200 Existing Ordinary Shares of 0.1 pence each. Full details are set out in a Circular which is being posted to Shareholders today (the Circular ) and are summarised below. The purpose of the Circular is to provide Shareholders with information about the background to and the reasons for the Issue and the Share Consolidation, to explain why the Board considers the Issue and the Share Consolidation to be in the best interests of the Company and its Shareholders as a whole and why the Directors recommend that Shareholder vote in favour of the Resolutions to be proposed at the General Meeting. Key Statistics Number of Existing Ordinary Shares in issue as at the date of the Circular 4,032,362,429 Number of New Ordinary Shares in issue immediately following the Share Consolidation 20,161,812 Nominal value of the Convertible Loan Notes 3,000,000 Estimated net proceeds of the Issue 2,845,000 5

6 Interest rate (per annum) of the Convertible Loan Notes 8.0 per cent. Conversion price of the Convertible Loan Notes 140 pence 1 Conversion discount of the Convertible Loan Notes 30.3 per cent. 2 Amount repayable (including accrued but unpaid interest) on the Redemption Date Number of CLN Shares to be issued on Conversion on the Redemption Date Enlarged ordinary share capital immediately following Conversion on the Redemption Date Percentage of enlarged ordinary share capital represented by the CLN Shares immediately following Conversion on the Redemption Date 3,040, ,171, ,333, per cent. 5 1 Assumes that the Share Consolidation occurs and is equivalent to a conversion price of the Convertible Loan Notes of 0.7 pence prior to the Share Consolidation. 2 As compared with the Company s closing share price on 8 March 2012 (being the latest practicable date prior to the publication of the Circular). 3 Assumes the accrual of interest from and including 1 July 2013 to but excluding the Redemption Date. 4 Assumes that the Share Consolidation occurs and that the Convertible Loan Notes (including accrued but unpaid interest from and including 1 July 2013 to but excluding the Redemption Date) are converted into CLN Shares on the Redemption Date. 5 Assumes that the Share Consolidation occurs, that the Convertible Loan Notes (including accrued but unpaid interest from and including 1 July 2013 to but excluding the Redemption Date) are converted into CLN Shares on the Redemption Date and that the shares to be issued in relation to the second tranche of the May 2011 Fundraising have yet to be issued and that no other issues of Shares by the Company take place following the date of this document. 2. Information on Lombard Medical Technologies PLC Lombard Medical is a UK company quoted on AIM and, together with its subsidiaries, is a medical devices group developing stent grafts and other medical products for use in the treatment of vascular disease. The Company is currently focused on device solutions for the repair of abdominal aortic aneurysm (AAAs). AAAs are a balloon-like enlargement of the aorta which, if left untreated, may rupture and cause death. The Company s headquarters are located in Oxfordshire, with operations in Prestwick, Ayrshire and Phoenix, U.S.A. Further background on the Company can be found on the Company s website ( The Company's lead product, Aorfix, is a bifurcated endovascular stent graft for use in the treatment of AAAs. Aorfix has been designed specifically to solve the problems that exist in treating complex tortuous anatomy which is often present in advanced AAA disease. Aorfix is currently being commercialised in the EU, certain markets outside the EU and has been submitted to the FDA for approval in the U.S. During the second half of 2011, the Company submitted to the FDA the last of six PMA (Pre- Market Approval) modular filings containing clinical data from its U.S. trial of Aorfix. The FDA has since confirmed that the PMA has been accepted for review and has granted the Company permission to treat a further 50 patients in the U.S. under its continued access program whilst the PMA is reviewed by the FDA. The Company has previously guided on its anticipation of FDA approval of Aorfix between the first and third quarters of The Company continues to anticipate FDA approval of 6

7 Aorfix during this time period but believes that it is now most likely to be obtained during the third quarter of However, any approval process with a regulatory authority such as the FDA can be subject to delays beyond the control of the applicant, so there remains a possibility that approval may instead be obtained during the fourth quarter of The Company continues to expect such approval to include an indication to treat patients with angulations at the neck (top) of the aneurysm of up to 90 degrees, Aorfix being the only endovascular stent graft to have this high angular indication in Europe. 3. Background to, and reasons for, the Issue In April 2011, the Company announced a two-tranche equity fundraising to fund the Company s business plan. This was approved by Shareholders on 6 May The first tranche of 13.0 million ( 12.2 million net of expenses), received in May 2011, is expected to fund the Company through the third quarter of By this time the Company expects to have obtained FDA approval of Aorfix which would then trigger receipt of the second tranche of 14.2 million ( 13.6 million net of expenses). The Company intends to use the funds received from the second tranche of the May 2011 Fundraising to redeem the full amount of the Convertible Loan Notes and to launch Aorfix in the U.S. through Lombard Medical s own sales force. Although the Company is confident that it is on track to receive FDA approval of Aorfix during the third quarter of 2012, there is a need for the Company to put in place sufficient financing to strengthen the Company s working capital position should there be any unforeseen delay in FDA approval beyond the end of the third quarter of As at 8 March 2012 (being the latest practicable date prior to the publication of the Circular), the Company does not anticipate such a delay. With this in mind, the Company is proposing to issue the Convertible Loan Notes. Having sought quotes from several finance providers, the Company is pleased that IAML, the Company s largest Shareholder, has offered the most attractive financing option. Subject to obtaining FDA approval of Aorfix by the end of 2012 and receiving the second tranche of 14.2 million ( 13.6 million net of expenses) from the May 2011 Fundraising, it is the Company s intention to redeem the full amount of the Convertible Loan Notes. Without the proceeds of the Convertible Loan Notes, if FDA approval of Aorfix is not obtained, or is delayed unexpectedly beyond the end of the third quarter of 2012, the Company will not have sufficient working capital to continue trading, according to its current business plan, beyond the end of the third quarter of Overview of the principal terms and conditions of the Convertible Loan Notes The Company is proposing to issue the Convertible Loan Notes to its largest Shareholder, IAML. The interest rate on the Convertible Loan Notes will be 8.0 per cent. per annum compounded annually, which subject to early redemption or conversion will be payable by the Company on 30 June 2012, 31 December 2012, 30 June 2013 and 1 September Subject to any conversion rights being exercised by the CLN Holder, the Convertible Loan Notes will be repayable by the Company on 1 September The Company may, however, elect to repay the Convertible Loan Notes on, or on any day prior to, 1 July 2013, in which case the Company must repay the principal amount together with any accrued but unpaid interest to the CLN Holder. Should the Company elect to repay the Convertible Loan Notes on a date earlier than 1 July 2013, the Company must additionally pay an early repayment fee of 30,000 to the CLN Holder. The CLN Holder will be, at any time between 1 July 2013 and 1 September 2013, entitled to convert the Convertible Loan Notes plus any accrued but unpaid interest into Ordinary Shares at a conversion price of 0.7 pence per Existing Ordinary Share assuming that the Share Consolidation does not occur (or the equivalent of 140 pence per New Ordinary Share following the Share Consolidation). The CLN Holder will also be entitled to require the Company to either: (a) repay the principle amount of the Convertible Loan Notes; or (b) 7

8 convert the Convertible Loan Notes into new fully paid Ordinary Shares on the occurrence of certain specified events described in Part II of the Circular. In the event that Conversion occurs, application will be made to the London Stock Exchange for the CLN Shares to be admitted to trading on AIM. The CLN Shares arising upon conversion of the Convertible Loan Notes will be credited as fully paid and rank pari passu with all other Ordinary Shares in issue on the date of conversion and will carry the right to receive all dividends and other distributions declared after that date. Additional detail on the principal terms and conditions of the Convertible Loan Notes is contained in the Circular. 5. Effect of the Issue on existing Shareholders Assuming no further exercise of options under the Options Schemes and/or issues of Ordinary Shares, if Full Conversion were to occur, the Company would have an Enlarged Share Capital comprising 22,333,788 New Ordinary Shares. On this basis, the CLN Shares that would be issued to IAML upon Full Conversion would represent approximately 9.73 per cent. of the Company s Enlarged Share Capital. Following the issue of CLN Shares upon Full Conversion, Shareholders other than IAML would suffer an immediate dilution of approximately 10 per cent. to their interests in the Company. The above percentages do not take into account any new shares in the capital of the Company that would be issued under the second tranche of the May 2011 Fundraising. 6. Background to, and reasons for, the proposed Share Consolidation As at 8 March 2012 (being the latest practicable date prior to the publication of the Circular), the Company had 4,032,362,429 Existing Ordinary Shares in issue and a mid market price at the close of business on such date of pence. The Board is of the view that it would benefit the Company and Shareholders to reduce the number of Existing Ordinary Shares in issue with a resulting adjustment in the market price of such shares, by consolidating the Existing Ordinary Shares on the basis of 1 New Ordinary Share of 20 pence for every 200 Existing Ordinary Shares of 0.1 pence each. This should assist in reducing the volatility in the Company s share price and enable a more consistent valuation of the Company. With shares of low denominations and the low levels of trading volumes associated with smaller companies, small absolute movements in the share price can represent large percentage movements resulting in volatility. The Board also believes that the bid-offer spread on shares priced at low absolute levels can be disproportionate to the share price and therefore to the detriment of Shareholders. 7. Overview of the proposed Share Consolidation Upon implementation of the Share Consolidation, Shareholders on the register of members of the Company on the Record Date, which is expected to be 6.00 p.m. on 27 March 2012, will exchange every 200 Existing Ordinary Shares that they hold for 1 New Ordinary Share. For example, if a Shareholder holds 1,000 Existing Ordinary Shares each with a nominal value of 0.1 pence as at the Record Date, such Shareholder will, following implementation of the Share Consolidation, hold five New Ordinary Shares each with a nominal value of 20 pence. As all existing ordinary shareholdings in the Company are proposed to be consolidated, the proportion of the issued ordinary share capital of the Company held by each Shareholder immediately before and after the Share Consolidation will, save for fractional entitlements, remain unchanged. Apart from the change in nominal value, the New Ordinary Shares arising on implementation of the Share Consolidation will have the same rights as the Existing Ordinary Shares, including voting, dividend and other rights. 8

9 No Shareholder will be entitled to a fraction of a New Ordinary Share and where, as a result of the consolidation of Existing Ordinary Shares described above, any Shareholder would otherwise be entitled to a fraction only of a New Ordinary Share in respect of their holding of Existing Ordinary Shares on the Record Date (a Fractional Shareholder ), such fractions will be aggregated with the fractions of New Ordinary Shares to which other Fractional Shareholders of the Company may be entitled so as to form full New Ordinary Shares and sold in the market on behalf of the relevant Fractional Shareholders. This means that any such Fractional Shareholder will not have a resultant proportionate shareholding of New Ordinary Shares exactly equal to their proportionate holding of Existing Ordinary Shares. The Directors will be authorised to sell New Ordinary Shares arising from fractional shareholdings on behalf of Fractional Shareholders as soon as reasonably practicable following the passing of Resolution 1, set out in the Notice of General Meeting, in respect of the Share Consolidation (the Share Consolidation Resolution ) at the best price then reasonably obtainable for those New Ordinary Shares. In the unlikely event that the net proceeds of sale are three pounds ( 3.00) or more per any entitled Fractional Shareholder, then such proceeds of sale will be paid to the relevant Fractional Shareholder. However, if such net proceeds of sale amount to less than three pounds ( 3.00) per any entitled Fractional Shareholder, the costs, including the associated professional fees and expenses, that would be incurred in distributing such proceeds are likely to exceed the total net proceeds distributable to such Fractional Shareholders. The Board is therefore of the view that, as a result of the disproportionate costs in such circumstances, it would not be in the Company s best interests to distribute such proceeds of sale and the proceeds will instead be retained for the benefit of the Company in accordance with the Company s articles of association and the Share Consolidation Resolution. The entitlement to Existing Ordinary Shares of holders of securities or instruments convertible into Ordinary Shares (such as options, warrants and convertible loan notes) shall be adjusted in accordance with the terms of such securities or instruments upon implementation of the Share Consolidation. 8. Current trading and prospects The Company reported its interim results for the six months ended 30 June 2011 on 30 August Sales in the second half of 2011 increased, with unaudited total revenues for the year ended 31 December 2011 of approximately 4 million (2010: 3 million). Aorfix sales increased 50 per cent. in the four main EU markets (UK, Germany, Italy and Spain) to approximately 2.25 million. UK revenue grew 26 per cent. The Company anticipates FDA approval of Aorfix during the third quarter of 2012 and continues to expect such approval to include an indication to treat patients with angulations at the neck (top) of the aneurysm of up to 90 degrees, Aorfix being the only endovascular stent graft to have this high angular indication in Europe. Once FDA approval of Aorfix has been obtained, the Company plans to launch Aorfix in the U.S. through Lombard Medical s own sales force. The Company expects to report its preliminary results for the year ended 31 December 2011 on 29 March Cash and working capital Net cash at 31 December 2011 was 7.5 million (unaudited). FDA approval of Aorfix, which the Company anticipates during the third quarter of 2012, will trigger receipt of 14.2 million ( 13.6 million net of expenses) being the second tranche of financing from the May 2011 Fundraising. These funds will be used to launch Aorfix in the U.S. On this basis the Company anticipates having sufficient working capital for its foreseeable requirements. 9

10 However, in the event that FDA approval of Aorfix is not obtained, or is delayed unexpectedly beyond the end of the third quarter of 2012 and, without the proceeds of the Convertible Loan Notes, the Company would not have sufficient working capital to continue trading according to its current business plan beyond the end of the third quarter of Therefore, if Aorfix has not obtained FDA approval by the end of the first half of 2012, the Company intends to activate a series of pre-planned measures to reduce the Company s cash burn. The Company is of the opinion that these measures, together with the proceeds of the Convertible Loan Notes, will allow the Company to continue trading into the second quarter of If by the end of the fourth quarter of 2012, FDA approval for Aorfix has still not been obtained, the Company will be required to seek additional funds through future equity or debt fundraisings, which may or may not be forthcoming. 10. Use of proceeds The proceeds of the Convertible Loan Notes, together with the Company s existing cash resources, will be applied towards general working capital purposes to ensure that the Company is able to continue operating at current levels should a short delay occur in the FDA approval process. If approval is obtained before the end of 2012, this will trigger receipt of the second tranche of 14.2 million ( 13.6 million net of expenses) from the May 2011 Fundraising, which the Company intends to use to redeem the full amount of the Convertible Loan Notes and to launch Aorfix in the U.S. through Lombard Medical s own sales force. If approval is obtained after the end of 2012, the proceeds of the Convertible Loan Notes will be used to fund the Company while it seeks alternative financing. 11. The Takeover Code The Issue gives rise to certain considerations under the Code. Brief details of the Panel, the Code and the protections they afford are described below. The Code is issued and administered by the Panel. The Code applies to all takeover and merger transactions, however effected, where the offeree company is, amongst other things, a listed or unlisted public company resident in the United Kingdom (and to certain categories of private limited companies). The Company is a listed public company and its Shareholders are entitled to the protections afforded by the Code. Under Rule 9 of the Code, where any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which (taken together with shares already held by him and an interest in shares held or acquired by persons acting in concert with him) carry 30 per cent. or more of the voting rights of a company which is subject to the Code, that person is normally required to make a general offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights in that company to acquire the balance of their interests in the company. Rule 9 of the Code also provides that, among other things, where any person who, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent, but not more than 50 per cent. of the voting rights of a company which is subject to the Code, and such person, or any person acting in concert with him, acquires an additional interest in shares which increases the percentage of shares carrying voting rights in which he is interested, then such person is normally required to make a general offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights of that company to acquire the balance of their interests in the company. An offer under Rule 9 of the Code must be in cash (or with a cash alternative) and at the highest price paid within the preceding 12 months for any shares in the company by the person required to make the offer or any person acting in concert with him. 10

11 Under the Code, a concert party arises when persons who, pursuant to an agreement or understanding (whether formal or informal), co-operate through the acquisition by any of them of shares in a company in order to obtain or consolidate control of that company. Under the Code, control means an interest or interest in shares carrying in aggregate 30 per cent. or more of the voting rights of a company, irrespective of whether such interest or interests give de facto control. Rule 9 of the Code further provides, amongst other things, that where any person who, together with persons acting in concert with him holds over 50 per cent. of the voting rights of a company, acquires an interest in shares which carry additional voting rights, then they will not generally be required to make a general offer to the other shareholders to acquire the balance of their shares. Pursuant to the Issue, IAML could increase its stake, in the event of Full Conversion, to 45.2 per cent. of the voting rights of the Company. Without a waiver of the obligations under Rule 9 of the Code, this would oblige IAML to make a general offer to Shareholders under Rule 9 of the Code. Dispensation from General Offer Under Note 1 on the Notes on the Dispensations from Rule 9 of the Code, the Panel will normally waive the requirement for a Rule 9 Offer if, amongst other things, the shareholders of a company who are independent of the person who would otherwise be required to make an offer and any person acting in concert with him pass an ordinary resolution on a poll at a general meeting approving such a waiver. The Panel may waive the requirement for a resolution to be considered at a general meeting (and for a circular to be prepared in accordance with Section 4 of Appendix 1 to the Code) if independent shareholders holding more than 50 per cent. of the company s shares capable of being voted on such a resolution confirm in writing that they would vote in favour of the waiver were such a resolution to be put to the shareholders of the company at a general meeting. The Company has obtained such written confirmation from the Majority Shareholders who are Independent Shareholders and the Panel has accordingly waived the requirement for a resolution to be put to a meeting of Independent Shareholders. Accordingly, the Issue may be effected without the requirement for IAML to make a Rule 9 Offer. Following completion of the Issue, IAML may be interested in Ordinary Shares carrying more than 30 per cent. of the Company s voting share capital, but may not hold Ordinary Shares carrying more than 50 per cent. of such rights. As such, any further increase in IAML s interest in Ordinary Shares will be subject to the provisions of Rule 9 of the Code. 12. Related Party Transaction IAML holds approximately per cent. of the current issued share capital of the Company. Owing to the size of its shareholding in the Company, the issue of the Convertible Loan Notes to IAML constitutes a related party transaction for the purposes of the AIM Rules. The Directors consider, having consulted the Company s nominated adviser, Collins Stewart, that the terms on which the Convertible Loan Notes are proposed to be issued to IAML are fair and reasonable insofar as its Shareholders are concerned. Further detail on IAML s shareholding in the Company, in the event of Full Conversion, is contained in section 1 of Part III of the Circular. 13. General Meeting Set out at the end of the Circular is a notice convening the General Meeting to be held at a.m. on 27 March 2012, at the offices of Berwin Leighton Paisner LLP, Adelaide House, London Bridge, London EC4R 9HA, at which the following Resolutions will be proposed for the purposes of, in the case of Resolution 1, effecting the Share Consolidation and, in the case of Resolutions 2 and 3, implementing the Issue: 11

12 Resolution 1 to consolidate every 200 Existing Ordinary Shares into 1 New Ordinary Share and to, amongst other things, authorise the Directors to sell, on behalf of Fractional Shareholders, any New Ordinary Shares arising from the aggregation of fractional entitlements at the best price then reasonably obtainable; Resolution 2 to authorise the Directors, for the purposes of section 551 of the Act, to allot shares in the Company or grant rights to subscribe for or convert any security into shares in the Company up to a maximum aggregate nominal amount of: (a) 480,000 in connection with the Issue; (b) 1,342,776 (being approximately one third of the existing share capital of the Company); and (c) further equity securities of the Company in connection with an offer of such securities by way of rights issue up to an aggregate nominal amount of 1,342,776 (being approximately one further third of the existing share capital of the Company); and Resolution 3 to disapply statutory pre-emption rights: (a) up to a maximum aggregate nominal amount of 480,000 in connection with the Issue; (b) in connection with an offer of such securities by way of rights issue; and (c) otherwise up to a maximum aggregate nominal amount of 201,618 in accordance with section 571 of the Act. Resolutions 2 and 3 seek Shareholder authority for the issue and allotment on a non preemptive basis of up to a maximum aggregate nominal amount of 480,000 in connection with the Issue. This relates to the maximum possible nominal amount of Ordinary Shares that the Company could be required to issue and allot to the CLN Holder under the terms of the Loan Note Instrument which is approximately 480,000,000 Existing Ordinary Shares in the event that the Share Consolidation does not occur or approximately 2,400,000 New Ordinary Shares following the Share Consolidation. The Company would only be required to issue and allot to the CLN Holder this amount of Ordinary Shares in the event that the Company were to default on all of the interest payments payable by it under the terms of the Loan Note Instrument such that all the accrued but unpaid interest payable during the term of the Convertible Loan Notes is required to be converted into Ordinary Shares in addition to the principal amount of the Convertible Loan Notes. Shareholders should note that the Share Consolidation and Resolution 1 are conditional on Admission and that Resolution 3 is conditional upon the passing of Resolution 2 with the consequence that, if either Resolution 2 or Resolution 3 is not passed, the Issue will not proceed. 14. Irrevocable Undertakings The Company has received irrevocable undertakings from IAML, Abingworth and MVM to vote (or procure the voting) in favour of the Resolutions in respect of a total of 2,400,894,041 Existing Ordinary Shares, representing per cent. of the existing issued ordinary share capital of the Company. 15. Recommendation Shareholders should note that, if either Resolution 2 or Resolution 3 is not passed, the Issue will not proceed. Without the proceeds of the Convertible Loan Notes, if FDA approval of Aorfix is not obtained, or is delayed unexpectedly beyond the end of the third quarter of 2012, the Company will not have sufficient working capital to continue trading, according to its current business plan, beyond the end of the third quarter of Accordingly, if the Issue does not proceed, the Board will need to consider alternative sources of funding which may or may not be forthcoming. The Directors therefore unanimously recommend that Shareholders vote in favour of the Resolutions as they intend to do in respect of their own beneficial holdings of Existing Ordinary Shares amounting, in aggregate, to 118,036,876 Existing Ordinary Shares, representing approximately 2.93 per cent. of the existing issued ordinary share capital of the Company. 12

13 16. Action to be taken A Form of Proxy for use at the General Meeting accompanies the Circular to be posted to Shareholders today. Whether or not Shareholders intend to be present at the General Meeting, Shareholders are asked to complete the Form of Proxy in accordance with the instructions thereon and to return it by post to the Company's registrars, Capita Registrars, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU, so as to be received as soon as possible, but in any event no later than a.m. on 23 March The completion and return of a Form of Proxy will not preclude Shareholders from attending the General Meeting and voting in person should they so wish. Definitions The following definitions apply throughout this announcement unless the context otherwise requires: Abingworth Act Admission AIM AIM Rules Bradshaw Capita Registrars Circular CLN Holder CLN Shares Code or Takeover Code Collins Stewart Company or Lombard Medical Abingworth LLP and Abingworth Bioventures V Co- Invest Growth Equity Fund LP and Abingworth Bioventures V LP, each being funds managed by Abingworth LLP the Companies Act 2006 (as amended from time to time) admission of the New Ordinary Shares to trading on AIM a market operated by London Stock Exchange the rules for companies with a class of securities admitted to AIM and their nominated advisers governing the admission to and operation of AIM as published by the London Stock Exchange from time to time Bradshaw Asset Management Limited a trading name of Capita Registrars Limited, registrars and receiving agent to the Company a circular of the Company containing the Notice of General Meeting to be posted to Shareholders on the date of this announcement the holder of the Convertible Loan Notes from time to time the Ordinary Shares to be issued and allotted to the CLN Holder assuming Conversion the City Code on Takeovers and Mergers Collins Stewart Europe Limited, nominated adviser to the Company Lombard Medical Technologies PLC Conversion conversion of the Convertible Loan Notes (including any accrued but unpaid interest payable thereon) into CLN Shares following exercise by the CLN Holder of the conversion rights in accordance with the terms and conditions of the Loan Note Instrument 13

14 Convertible Loan Notes Directors or Board Enlarged Share Capital Effective Date EU Existing Ordinary Shares FDA Milestone Requirements Fidelity Form(s) of Proxy Fractional Shareholder FSA Full Conversion General Meeting Group IAML Independent Shareholders Issue the 3 million in nominal amount of 8.0 per cent. unsecured convertible redeemable loan notes of the Company to be created and constituted on the terms of the Loan Note Instrument, with the rights described in Part II of the Circular the directors of the Company whose names are set out on page 5 of the Circular, or any duly authorised committee thereof the entire issued share capital of the Company assuming Full Conversion the effective date of the Share Consolidation being the date on which the New Ordinary Shares are admitted to trading on AIM which will occur as soon as reasonably practicable following the Record Date and which is expected to occur at 8.00 a.m. on 28 March 2012 (or such later time and date as the Directors may determine) the European Union the ordinary shares of 0.1 pence each in the capital of the Company in issue as at the date of the Circular each of the conditions as outlined in section 2 of Part II of the Company s circular to Shareholders dated 20 April 2011 FIL Investments International as agent for and on behalf of Fidelity Funds European Smaller Companies Pool (F/ESM) the form(s) of proxy for use in connection with the General Meeting accompanying the Circular has the meaning given to it in section 7 of this announcement the Financial Services Authority Conversion assuming that the Share Consolidation occurs and that the Convertible Loan Notes (including accrued but unpaid interest from and including 1 July 2013 to but excluding the Redemption Date) are converted into CLN Shares on the Redemption Date the general meeting of the Company to be held at the offices of Berwin Leighton Paisner LLP at Adelaide House, London Bridge, London EC4R 9HA at a.m. on 27 March 2012 to approve the Resolutions the Company, its subsidiaries and its subsidiary undertakings Invesco Asset Management Limited, a whollyowned subsidiary of Invesco Limited, acting as agent for and on behalf of its discretionary managed clients all Shareholders with the exception of IAML the proposed issue of the Convertible Loan Notes by the Company to IAML 14

15 Loan Note Instrument London Stock Exchange the proposed loan note instrument of the Company constituting the Convertible Loan Notes and to be executed by the Company conditional upon the passing of Resolutions 2 and 3 London Stock Exchange plc, its subsidiaries and its subsidiary undertakings Majority Shareholders Abingworth, MVM, Fidelity, Craig Rennie, Bradshaw and Octopus May 2011 Fundraising MVM New Ordinary Shares Notice of General Meeting Octopus Ordinary Shares Panel Prospectus Rules Record Date Redemption Date Resolutions Rule 9 Offer Share Consolidation the two tranche equity fundraising approved by Shareholders on 6 May The first tranche of 13.0 million ( 12.2 million net of expenses) was received in May The receipt of the second tranche of 14.2 million ( 13.6 million net of expenses) is triggered by the FDA Milestone Requirements having been satisfied (or waived) MVM Life Science Partners LLP and MVM Fund III LP and MVM Fund III (No. 2) LP, being funds managed by MVM Life Science Partners LLP the ordinary shares of 20 pence each in the capital of the Company resulting from the Share Consolidation and including, where the context requires, the CLN Shares assuming exercise of the Convertible Loan Notes conversion rights in accordance with the terms of the Loan Note Instrument the notice convening the General Meeting, a copy of which is set out at the end of the Circular Octopus Investments Ltd. prior to the Share Consolidation the Existing Ordinary Shares and, thereafter, the New Ordinary Shares the Panel on Takeovers and Mergers the Prospectus Rules published by the FSA 6.00 p.m. on 27 March 2012 (or such later time and date as the Directors may determine) the latest date of redemption of the Convertible Loan Notes in accordance with the terms and conditions of the Loan Note Instrument, being 1 September 2013 the resolutions set out in the Notice of General Meeting and Resolution shall mean any one of them a general offer to all holders of any class of equity share capital or other class of transferrable securities carrying voting rights of a company to acquire the balance of their interests in the company as required to be made in accordance with Rule 9 of the Code the proposed consolidation of every 200 Existing Ordinary Shares into 1 New Ordinary Share pursuant to Resolution 1, further details of which 15

16 are set out in sections 6 and 7 of this announcement Share Consolidation Resolution Shareholders has the meaning given to it in section 7 of this announcement the holders of Existing Ordinary Shares subsidiaries and subsidiary undertakings UK or United Kingdom U.S. or U.S.A have the meaning set out in section 1162 of the Act the United Kingdom of Great Britain and Northern Ireland the United States of America, each state thereof, its territories and possessions, and all areas subject to its jurisdiction and p respectively pounds and pence sterling, the lawful currency of the United Kingdom 16